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Full text of "Deep seabed minerals: resources, diplomacy, and strategic interest"

f^ 



95th Congress 
2d Session 



COMMITTEE PRINT 



DEEP SEABED MINERALS: RESOURCES, 
DIPLOMACY, AND STRATEGIC INTEREST 



PREPARED FOR THE 

SUBCOMMITTEE ON 
INTERNATIONAL ORGANIZATIONS 

OF THE 

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES 

BY THE 

SCIENCE POLICY RESEARCH, FOREIGN AFFAIRS AND NATIONAL 

DEFENSE, AND ECONOMICS DIVISIONS 

CONGRESSIONAL RESEARCH SERVICE 

LIBRARY OF CONGRESS 







r. 



MAR 



1978 



MARCH 1, 1978 






c 
^ 






Printed for the use of the Committee od International Relations 



20-211 



U.S. GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1978 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 



COMMITTEE ON INTERNATIONAL RELATIONS 

CLEMENT J. ZABLOCKI, Wisconsin, Chanman 



L. H. FOUNTAIN, North Carolina 
DANTE B. FASCELL, Florida 
CHARLES C. DIGGS, Je., Michigan 
ROBERT N. C. NIX, Pennsylvania 
DONALD M. ERASER, Minnesota 
BENJAMIN S. ROSENTHAL, New York 
LEE H. HAMILTON, Indiana 
LESTER L. WOLFF, New York 
JONATHAN B. BINGHAM, New York 
GUS YATRON, Pennsylvania 
MICHAEL HARRINGTON, Massachusetts 
LEO J. RYAN, Califoniia 
CARDISS, COLLINS, Illinois 
STEPHEN J. SOLARZ, New York 
HELEN S. MEYNER, New Jersey 
DON BONKER. Washington 
GERRY E. STUDDS, Massachusetts 
ANDY IRELAND, Florida 
DONALD J. PEASE, Ohio 
ANTHONY C. BEILENSON, California 
WYCHE FOWLER, Jr.. Georgia 
E (KIKA) DE LA GARZA. Texas 
GEORGE E DANIELSON, California 
JOHN J. CAVANAUGH, Nebraska 



WILLIAM S. BROOMFIELD, Michigan 
EDWARD J. DERWINSKI, Illinois 
PAUL FINDLEY, Illinois 
JOHN H. BUCHANAN, Jr., Alabama 
J. HERBERT BURKE, Florida 
CHARLES W. WHALEN, Jr., Ohio 
LARRY WINN, Jr., Kansas 
BENJAMIN A. OILMAN, New York 
TENNYSON GUYER, Ohio 
ROBERT J. LAGOMARSINO, California 
WILLIAM F. GOODLING, Pennsylvania 
SHIRLEY N. PETTIS, California 



John J. Brady, Jr., Chief of Staff 



Subcommittee on International Organizations 

DONALD M. ERASER, Minnesota, Chairman 
MICHAEL HARRINGTON, Massachusetts EDWARD J. DERWINSKI, Illinois 

BENJAMIN S. ROSENTHAL, New York WILLIAM F. GOODLING, Pennsylvania 

LEE H: HAMILTON, Indiana 
LEO J. RYAN, California 

Robert B. Boettcher, Subcommittee Staff Director 

Thomas R. Smeeton, Minority Staff Consultant 

Margaret E. Galey, Subcommittee Staff Associate 

EsTRELUTA JoNES, Subcommittee Staff Associate 

Josephine Weber, Staff Assistant 



(III 



FOREWORD 



House of Representatives, 
Committee ox International. Relations, 

Washington^ D.C., Ma7x-h i, 1978. 

This study of deep seabed minerals has been prepared by the Con- 
gressional Research Serv'ice at the request of Congressman Donald M. 
Fraser, chairman of the Subcommittee on International Organiza- 
tions and of Congressman Morris K. Udall, chairman of the Commit- 
tee on Interior and Insular Affairs. 

Deep seabed minerals have for several years been of particular po- 
litical and economic interest to industry, to U.S. legislators, and to 
delegates at the Third United Nations Law of the Sea Conference. 
This study has been prepared to clarify a number of the issues sur- 
rounding domestic and international discussions of deep seabed min- 
ing and to assist Members of Congress in considering legislation on 
deep seabed mining. The findings and conclusions in the study are 
those of three divisions of the Congressional Research Service which 
contributed to the preparation of the study. They do not necessarily 
reflect the views of members of the Committee on International 
Relations. 

Clement J. Zablocki, Chairman, 
(m) 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/deepseabedmineraOOIibr 



LETTER OF TRANSMITTAL 



U.S. House of Eepresextati\t:s, 
Subcommittee on Ixternatioxal Organizatioxs, 

Washingto7i, B.C., March i, 1978. 
Hon. Cleivient J. Zablocki, 

Chalrmun^ Committee on International Relations^ U.S. House of 
Representatives, Washington, B.C. 
Dear Mr. Cpiairman : As part of the ongoing activities of the Sub- 
committee on International Organizations, I am submitting this study 
prepared by the Congressional Eesearch Service at the request of Con- 
gressman Udall and myself. 

The study summarizes the development of the issue of deep seabed 
mining in the United Nations Third Law of the Sea Conference, the 
U.S. Congress, and the business community. It also provides an over- 
view of the use, supply, and demand of nickel, cobalt, copper, and 
manganese, a discussion of short- and long-term vulnerabilities of 
supply, and trends and projections for deep seabed mining. 

The LT.S. Congress is currently considering legislation on deep sea- 
bed mining. This study is, therefore, timely and will hopefully offer 
readers a better understanding of some of the complex issues involved 
in deep seabed mining debate. 

Donald M. Fraser, 
Chairman, Subcommittee on International Organizations. 



(V) 



LETTER OF SUBMITTAL 



The LiBiLVRY of Congress, 
Congressional Research Service, 

Washington^ B.C. 
Hon. iNIoRRis K. Udall, 

Cliairman^ Committee on Interior and Insular Affairs^ 
Hon. Donald M. Fraser, 

ChairiTKin^ Siibcommittee on International Organizations^ U.S. House 
of Representatives^ Washington, B.C. 

Dear Congressman Udall and Congressman Fraser : Pursuant to 
your request for a comprehensive analysis of the strategic need for the 
nodular mineral resources of the deep seabed, we are submitting a 
study entitled, "Deep Seabed Minerals: Resources, Diplomacy, and 
Strategic Interest." 

The report includes a summary of the development of the deep sea- 
bed mining issue within the United Nations, the U.S. Congress, and 
the industrial community. It contains a resources overview of the four 
major metals of commercial interest in deep seabed nodules, a dis- 
cussion of the possibilities of cartelization, and U.S. stockpile 
strategy. The report also includes an analysis of the defensibility of 
seabed mining operations within the context of a changing ocean 
regime. A final section is devoted to projections of possible mineral 
recovery and economic benefits of seabed mining. 

The report was prepared by an interdisciplinary team drawing on 
the expertise available in our Science Policy Research Division, For- 
eign Affairs and National Defense Division, and Economics Division. 
Dr. Franklin P. Huddle, senior specialist in science and technology, 
contributed the section on seabed mining technology and American 
diplomacy in chapter II and the section on stockpile strategy in 
chapter IV. Marjorie Ann Browne, analyst in international relations, 
contributed chapter Y and the section of chapter II concerning the 
Third U.N. Law of the Sea Conference. Chapter VI was prepared by 
Alva M. Bowen, specialist in national defense and Marion IMontague, 
analyst in foreign affairs. Dr. Warren E. Farb, specialist in quantita- 
tive economic analysis, contributed a subsection of chapter IV on gen- 
eral market considerations. Dr. James E. Mielke, analyst in marine 
and earth sciences, prepared the remainder of chapters II and IV, and 
wrote chapters I, III, and VII. Dr. Mielke also served as coordinator 
of this interdisciplinary eifort and was responsible for composition of 
the executive summary and collocation of the final text. 

I trust that this study will serve your committees' needs as well as 
those of other committees and Members of Congress concerned with 
the deep seabed mining issue vis-a-vis interim domestic legislation to 
promote and regulate its development. On behalf of the Congressional 
Research Service, may I express my appreciation for the opportunity 
to undertake this timely and worthwhile assignment. 
Sincerely, 

Gilbert Gtjde, Birector, 

(vn) 



CONTENTS 



Page 

Foreword in 

Letter of transmittal v 

Letter of submittal vir 

Summary 1 

I. Introduction 11 

II. Background perspectives 13 

Development of commercial interest in deep seabed mining 13 

Current status of nodule mining consortia 14 

Kennecott Consortium 15 

Ocean Management Inc 16 

Ocean Mining Association 16 

Ocean Minerals Co 10 

French Association 17 

Continuous Line Bucket Group 17 

Commencement of commercial operations 17 

Third U.N. Law of the Sea Conference — background, develop- 
ment, and progress 18 

Previous conferences 18 

The Malta initiative 19 

The Seabed Committee and its achievements 20 

1969-70: More study 20 

1971 through 1973: Preparation for the Conference 22 

U.S. Policy Development in the committee 23 

The Conference— 1973 through 1977 24 

Development of the Law of the Sea Treaty: 1973 through 

1977 26 

Difficulties of negotiation on deep seabed issues 27 

Deep sea mining: goals and proposals, 1977 28 

Development of congressional concern 32 

Seabed mining technology and American diplomacy 36 

III. Metals from deep seabed minerals: Overview 42 

Nickel 42 

Uses and substitutes 42 

Demand: United States and world 43 

Supply: Domestic, imports, and world production 45 

U.S. reserves and resources 46 

World reserves and resources 46 

Copper 46 

Uses and substitutes 46 

Demand: United States and world 47 

Supply: Domestic, imports, and world production 48 

U.S. reserves and resources 50 

World reserves and resources 50 

Cobalt 51 

Uses and substitutes 51 

Demand: United States and world 51 

Supply: Domestic, imports, and world production 54 

U.S. reserves and resources 54 

World reserves and resources 54 

Manganese 54 

Uses and substitutes 54 

Demand: United States and world 55 

Supply: Domestic, imports, and world production 57 

U.S. reserves and resources 58 

World reserves and resources 58 

Summary 58 

(IX) 



Page 

IV. Supply \'ulnerability 60 

Feasibility of cartels and embargoes 60 

General considerations 60 

Nickel 62 

Short-term supply disruptions 63 

Long-term supply disruptions 64 

Copper 65 

Short-term supply disruptions 66 

Long-term supply disruptions 66 

Cobalt 67 

Short-term supply disruptions 67 

Long-term supply disruptions 67 

Manganese 68 

Short-term supply disruptions 69 

Long-term supply disruptions 69 

General market considerations 70 

Summary 71 

U.S. stockpile strateg}" 72 

Current defense interest and strategic requirements 73 

Future needs for peace and war 75 

Manganese 75 

Copper 76 

Nickel 76 

Cobalt 76 

Seabed minerals and stability of mineral supply-demand 77 

V. U.S. foreign policy interests at the UNCLOS III 78 

Common heritage of mankind 78 

General Assembly interpretation 78 

Resolutions 78 

Statements in the General Assembly 81 

Legal status of Assembly resolutions 82 

General comments on resolutions 82 

1969 moratorium resolution 83 

1970 declaration of principles 84 

The United States and the comm.on heritage 86 

Current U.S. position in Committee 1 87 

U.S. interests 87 

Economic 87 

Defense 88 

International/foreign policy 88 

U.S. efforts in Committee 1 89 

U.S. position in 1978 session 89 

VI. Defensibility of deep seabed mining operations 91 

Introduction 91 

The changing ocean regime 92 

Technology and the new ocean regime 92 

Political change and the new ocean regime 93 

Examples of Law of the Sea related conflicts since World 

War II 94 

Fisheries cases 95 

The "Tuna War" 95 

The "Cod War" 96 

Other fishery incidents off coasts of Latin America 97 

Oil exploration 97 

The Paracel Group 98 

The Aegean Sea: the Greek-Turkish dispute 99 

The Third United Nations Conference on the Law of the 

Sea and the development of customary international law__ 100 

A new Law of the Sea trcvity? 100 

Implications of Seabed Mining in the absence of an accept- 
able tr(>aty 101 

Defensibility of deep seabed mining operations in the absence of 

an acceptable treaty 102 

Possible security threats to U.S. deep s<'al)e(lminingoperations. 102 

Defense of deep seabed mining ojierations 103 

Possible n^taliatory actions ngjiinst U.S. maritime operations 

other than deep seabed mining 103 



XI 

VI. Defen.sibiliU'- of deep soal)efl mining op(M-ations — Continued Tage 
Defensibility of tleep seabed mining operations, etc. — Continued 
Response to coastal State claims of comprehensive jurisdic- 
tion over their economic zones 104 

Defense considerations in legislation affecting deep seabed mining 

operations 106 

General Thrust of major bills 107 

Security-related provisions of bills 108 

Dissenting congressional views 108 

Agency views 109 

Defense-related questions for future deliberations 110 

VII. Trends and projections for deep seabed mining 111 

Effect on supply and demand 111 

Case I: Seabed mining commencing in 1985 112 

Case II : Seabed mining commencing in 1990 115 

Market trends 118 

Seabed mining commencing in 1 985 118 

Seabed mining commencing in 1990 120 

U.S. market trends and economic benefits 121 



SUMMARY 

Scientific interest in deep seabed nodules began with their discovery 
in the 1870"s. The hundred years ensuing lias been a period of unprece- 
dented technological development, of which one of the greater ac- 
complishments was the American landing on the Moon. In fact, it 
has been stated that more is now known about the Moon than is known 
about the Earth's deep ocean basins. How^ever, the ocean basins are 
now gaining a higher measure of visibility as technology is steadily 
being developed to recover commercially manganese nodules from 
the ocean floor beneath 3 miles of water. 

AVhat began as individual efforts by a small number of companies 
(mostly United States) in the early 1960's has developed into inter- 
national consortia for deep ocean mining. The major reason for the 
evolution of joint ventures or ocean mining consortia is the inability 
and/or unwillingaiess of any individual company to meet the high 
equity capital investments recjuired to demonstrate the effectiveness 
of its mining and processing system in view of the uncertain political 
climate surrounding development of deep seabed resources. In addi- 
tion to shared risk, j^ooled capabilities, and shared investment capital, 
a broader measure of support could be gained from consortia partici- 
pants representing several countries. Currently among the principal 
ocean mining groups there are four major consortia, a smaller nat- 
ional joint venture, and a sixth interaational group engaged in devel- 
opment of a mining system but not committed to joint commercial 
mining operations. 

Concomitant with this commercial interest in deep seabed mining 
is an effort that has been actively underway for nearly a decade to 
establish an international legal regime for the management of the 
vSeabed areas beyond the limits of national jurisdiction. The current 
Law of the Sea Conference is the third plenipotentiary meeting 
sponsored by the United Xations with the goal of drafting treaty law 
to address certain unresolved problems developing from the increased 
use of the oceans and their resources. Two previous conferences, in 
1958 and 1960, attempted to codify existing customary law but left 
a number of issues, primarily regarding the limits of jurisdiction 
and development of seabed resources, largely unresolved or open to 
considerable latitude in interpretation. 

Following 6 years of preparatory woi'k, the Third Conference on 
the Law of the Sea convened in 1973. However, rather than having 
before it a comprehensive draft treaty text, as had been hoped, the 
conference began by facing a list of 25 topic headings and several sub- 
headings to serve as a framework for the discussion and drafting of 
treaty articles. At the conclusion of the third session of the conference 
in 1975, the first single negotiating text was compiled by the chairmen 
of each of the three conference committees. This text did not repre- 
sent agreed upon treaty articles, but did indicate the direction of 
negotiations and served as a starting point for discussions at the next 

(1) 



session. The most recent draft text, produced in July 1977, after the 
sixth session, showed progress in many areas but as its predecessors, 
it has drawn strong criticism and does not represent a true consensus 
of opinion. In format, however, it is closer to the organization of a 
treaty with draft articles no longer organized by committee but inte- 
grated into treaty parts. The area that continues to be the major 
center of controversy is the regime and international organization to 
develop the deep seabed resources. 

In view of what has been described as having the potential to be- 
come a precedent-setting achievement in world order, Congress has 
followed with keen interest the preparations for, and negotiations 
within, the Third Law of the Sea Conference. Following each session 
membere of the U.S. Law of the Sea delegation have been asked to 
clarify the status of the treaty negotiations before congressional com- 
mittees. Furthermore, recognizing that the consideration by an inter- 
national conference of a treaty on ocean law different in concept from 
existing customary law enhances the uncertainty that large invest- 
ments in de^p seabed mining might be lost without compensation, bills 
have been introduced into the Congress to provide for the continuity 
of dev^elopment and regulation of U.S. ocean mining interests in the 
interim period before a possible treaty is concluded. 

In 1952 when the President's Commission of Materials and Policy 
(popularly known as the Paley Commission) published its report, 
the prevailing assumption regarding deep seabed resources appeared 
to be that when the seabed was exploited, U.S. technology would be 
at the forefront and there would be no diplomatic obstacle in the way 
of access to the seabed nodules. In the past 25 years circumstances 
have changed this picture considerably. Today seabed mining tech- 
nology^ has to some extent become an instnmient of American diplo- 
macy as access to deep seabed nodule resources is undergoing extensive 
international negotiation. Negotiation of the fair disposition of sea- 
bed mineral wealth among developed and developing countries, among 
maritime and landlocked countries, requires resolution not only of 
the issue of competing interests in, and rights to, the resources, but 
also of the issue of private property rights to the intellectual property 
of technology' for recovery and processing which creates the economic 
A'ahie. 

Each of the four metals of major commercial interest contained in 
seabed tiocIuIos is of critical impoi-tance to the Ignited States. !Mangn- 
nese is essential in the basic process of making steel and is also used, 
as is nickel and cobalt, in many specialized alloys. Because of its high 
conductivity, copper is of particular importance in electrical appli- 
cations. 'VMiile there is no reasonable substitute for manganese in mak- 
ing steel, substitutes exist for the other metals in many of their 
applications. However, the uso of substitutes generally entails the loss 
of efficiency or performance quality of the product and /or higher cost. 

Projecting to tho. end of the century, cumulative world consumption 
of primary Cinine output) nickel is expected to approach 35 millioii 
short, tons. World reserves are estimnted to range from a conservatiA'C 
45 million short tons up to GO million tons. Annual domestic nickel 
consumption is expected to increase at TT)Uirhly an average rate of 
?> percent per year, reachinir 350.000 to 400,000 short, tons of primar\' 
nickel in the vear 2000. Present U.S. nickel reserves are estimated 



3 

at 200,000 tons. Recycling will provide increasing percentages of sec- 
ondary nickel. Nickel is not currently stockpiled by the U.S. Govern- 
ment, although a new stockpile goal of 204,333 shoit tons has recently 
been set. 

World copper demand is expected to increa.se at an average rate of 
4 percent annually through the year 2000, producing a cumulative 
world demand for primary copper of 320 million tons. World copper 
reserves are estimated at 506 million tons, considerably more than the 
projected cumulative demand through the year 2000. Cumulative do- 
mestic demand for primary copper is likely to range from 70 to 75 
million tons through the end of the century^ less than currently proven 
reserves. The Government stockpile contains 20,000 tons of copper 
with a new goal of 1,299,000 tons. 

Cobalt is produced as a byproduct from the primary production of 
copper, nickel, iron, or other metals. Current world reserves are esti- 
mated at 1.6 million tons with the cimiulative world demand through 
the end of the century reaching close to 1.4 million tons. Exploratioi? 
activity can serve to increase reserves, and at the same time economic 
conditions can serve to increase or decrease reserv^es through higher 
prices or higher production costs. Cobalt consumption in the United 
States is expected to reach 22,000 tons annually by the year 2000 for 
a cumulative total consumption of 350.000 tons of primary cobalt 
during that period. At present the United States has no cobalt reser\'es. 
Government stocks of cobalt total 20,362 short tons with plans to 
increase this amount to 42,708 tons. 

World demand for manganese is expected to increase at 3 percent 
annually averaged over the next 23 years. During this period cumula- 
tive demand will total close to 400 million tons (manganese content). 
World reserves are conservatively estimated at nearly double that 
amount and may be much greater depending on the economic factors 
considered. At present market conditions, the United States has no 
manganese reserv^es. Currently, the United States consumes 12 percent 
of the annual world manganese production, a percentaore that is likely 
to decline as steel production in other countries expands more rapidly. 
Cumulative domestic demand for manofanese through the year 2000 
will likely total between 40 and 45 million tons. Stockpile goals for 
manganese materials are satisfied with an inventor\^ of 2,294,000 tons 
of metallurgical ore, 600,000 tons of high carbon ferromanganese, and 
lesser quantities of other manganese materials. In addition the stock- 
pile contains an uncommitted excess of 1,338,000 tons of metallurgical 
ore including nonstockpile grade. 

Most mineral (nonenergy) and metal cartel-like producer organi- 
zations do not pose a major long-term economic threat to major im- 
porting countries such as the United States. With regard to the four 
major metals in deep seabed nodules, some short-term cartel action 
may be disruptive in the cobalt market and perhaps to a very minor 
extent in the copper market if U.S. dependence on imported copper 
•continues to increase. Short-term producer withholdinor mav also in- 
fluence the manganese market. Despite recent Canadian statements 
regarding the possible formation of a nickel cartel, nickel supplies 
from Canada appear to be dependable for the near future. Price in- 
creases related to increasing cost of Canadian prod\iction appear 
likely, but lower cost producing areas will gain a greater measure of 
the market over the Ions: term. 



Any supply restriction, whether a few months or a few years, would 
extract an economic penalty on the United States, and the longer the 
supply restriction, the greater the total cost of the disruption. The 
effect of this penalty would be to some extent inflationaiy by increas- 
ing prices and to some extent recessionary by cutting back produc- 
tion. These trends, however minor, would have a ripple effect through 
the economy. In such an event, alternative sources of supply would 
be helpful in maintaining free market conditions and mitigating eco- 
nomic dislocations. Xew alternative sources of metals contained in 
manganese nodules could help limit price increases which, although 
market -induced, have been sustained over the long term. Prices can 
be expected to continue to increase substantially through normal mar- 
ket conditions due to increased production costs. ^Mineral exporting 
countries can also be expected to increase taxes for exix>rted raw 
materials. 

A number of studies have recently examined the economic factors 
that influence the minerals markets and the market power of mineral 
producers and producer organizations. ]\Iost of these studies have 
indicated that the likelihood of sustained cartel action is remote. 
Among the considerations, however, that appear to be largely dis- 
counted in economic analyses of price, supply, and demand elasticity 
are the constraints or limitations involved in minerals production. 
Xot only are long leadtimes (on the order of 10 to 20 years) involved 
in locating, proving, and developing a new ore body, but there are 
financial constraints in forming the large capital investments that 
must be made. If a major producer or group of suppliers were to 
withhold production in order to drive up prices, large new supplies 
could not readily be brought into production. Leadtimes would have 
a dampening effect on elasticity. Leadtime is important both in terms 
of developing new deposits and in utilizing and developing substitutes. 
Political forces as well as economic factors affect the success of 
cartels or producer organizations. Since it is virtually im[X)ssible to 
accurately predict the political motivations of the mineral producing 
and exporting countries, conclusions regarding the formation and 
success of mineral producing cartels over the long term must, of neces- 
sity, be considered somewhat speculative. In general, the future 
strength of producer organizations may depend largely on the actions 
of four major mineral exporting countries — Australia, Brazil, Can- 
ada, and the Republic of South Africa. In most mineral commodities 
at least one of these countries is a major exporter and their cumulative 
potential for future development is large. In addition, the Soviet 
T'nion has a large mineral wealth and relies on mineral exports for 
revenues needed to purchase other commodities. Future Soviet trade 
policies in the Western market and success in dealing with production 
constraints will also influence the success of cartel-like producer 
organizations. 

U.S. consumption of materials (40,000 pounds of new mineral ma- 
terials per person per year) is greater than that of any other country, 
l)ut the rate of increase ap])roximates the increase in ILS. population, 
whereas for many other countries the rate substantially exceeds that 
of population growth. Mineral resources continue to be discovered, 
l)ut the ability of the world's mining industry to exploit reserves (and 
convert re.sources to reserv-es) at an adequate rate to meet future de- 
mand is uncertain. The objective of many developing countries is to 



achiev'O a condition of aflluence eciualin^ that of tlie United States. It 
is higlily unlikely that the world's reserves are adecinatc to make this 
goal feasible, even if world prices rise considerably to enal>le deposits 
now classed as "resources" to be reclassified as "reserves." Technology 
lias enabled the conversion of large resources to reserves, but as ore 
quality declines the energy requii-ed for extraction and processing 
continues to increase — posing a serious future pi*oblein of virgin 
supply. 

The contemporary military problem in materials supply for the 
United States does not appear acute. A more important militar}^ con- 
sideration is the ability of the U.S. economy to sustain the costs of 
military preparedness in an age when military superiority (or even 
parity) depends upon vigorous activit}^ in research and development 
of military hardware followed by its energetic and costly deployment. 
Only a nation with a sound currency and a healthy economy can 
afford this severe drain. The availability of raw materials is the essen- 
tial starting point of industrial activity that is required to suppoit the 
requisite "healthy economy." Uncertainty of supply of essential im- 
ported materials and wide fluctuation in prices of materials generally 
can result in an impairment of the national economy — in terms of in- 
flation, unemployment, and business failures or slowed investment 
in capital maintenance and expansion. 

Accordingly, recent studies have concluded that some form of eco- 
nomic stockpiling is necessary to achieve supply stabilit}^, deter threats 
of cartel action to exploit monopoly positions, or overcome sudden 
shortages from other causes. Consequently, new stockpile objectives an- 
nounced on October 1, 1976, plan for 3 years of an emergency of in- 
definite duration, and separately provide for the civilian economy after 
discoimting for conservation. Quantitatively, supply of the four major 
nodule metals to satisfy military requirements in a national emergency 
would not necessitate seabed development, as long as the strategic and 
critical material stockpile is maintained. 

U.S. executive branch policy on deep seabed resources has developed 
within a foreign policy setting responsive to the perceived require- 
ments for successful negotiations at the Law of the Sea (LOS) Con- 
ference. The guiding theme for the Conference with regard to resource 
exploitation in the deep seabed has been the "common heritage of 
mankind" concept. This concept was first brought to the attention of 
the United Nations in 1967 and subsequently set forth in the 1970 
"Declaration of Principles Governing the Sea-Bed and the Ocean 
Floor, and the Subsoil Thereof, beyond the Limits of National Juris- 
diction." Participants at the Conference, including the United States, 
support the "common heritage" concept, but they find agreement on 
its translation into treaty obli^rations and rights to be a difficult under- 
taking. Attempts to deSfine the legal status of this term depends on 
its interpretation and the manner in which it is used. A resolution 
of the U.N. General Assembly (other than for expenses and organiza- 
tional matters) is not binding, but criteria other than the language 
and intent in the resolution itself are used to measure the legal effect 
of the resolution. These criteria include the degree of unanimity by 
which the resolution was adopted, the views of member states toward 
the resolution and the subsequent reference and recitation of the res- 
olution in international community bodies and by nation states. 

20-211—78 2 



Applying these criteria to two significant U.N. resolutions regard- 
ing development of deep seabed resources, it would appear that there 
miglit be a basis for considering that the 1970 Declaration of Prin- 
ciples may have some legal effect although it certainly cannot be 
viewed as incurring binding obligations on states. It was adopted by 
a vote of 108 in favor, opposed, and 14 abstentions. Most nations 
have considered the document as stating legal principles, which are 
now being incorporated into the text of a treaty regime. If a LOS 
Treaty is not adopted by the Conference, however, it may be that the 
'•common heritage" concept as embodied in the declaration of prin- 
ciples might, in the future, attain a status in international customary 
law similar to that of the Universal Declaration of Human Rights. 
However, the 1969 moratorium resolution does not appear to have 
achieved this status and its general impact appears to be recommend- 
atorv, a concluusion supported by the vote in the General Assembly 
(62 in favor, 28 against, and 28 abstentions) on the resolution and by 
its absence from citation in General Assembly resolutions since its 
adoption. 

U.S. efforts in committee I of the LOS Conference have been in- 
fluenced by a number of differing domestic and international interests. 
The U.S. role as a maritime power has tended to work in support of 
early adoption of a treaty in an effort to freeze further coastal state 
expansions of jurisdiction into the high sea area and to secure freedom 
of navigation. U.S. companies have anticipated free access to deep 
seabed resources, protection against price and production controls, 
coverage by U.S. laws (customs, tax, safety, and pollution control), 
and diplomatic protection by the U.S. Government. The absence of 
such elements in an internationally negotiated treaty has introduced 
pressures for either (1) unilateral legislation to recognize deep sea- 
bed mining interests, (2) no treaty, or both. The developing nations 
liave brouirht the international economic issues of NIEO (New Inter- 
national Economic Order) and the North/South dialog into the LOS 
Conference discussions of a regime and organization to develop deep 
seabed resources. For tlie United States, a coordinated approach to 
XIEO issues would enhance credibility and further negotiations in 
otlier forums. 

There are some who hold that a new treaty on the law of the sea, 
wliile desirable, is not necessary and might even be disadvantageous to 
the Ignited Statas in some particulars. Those who hold this position 
assert that customary law of the sea, as established over the past several 
Imndred years and as codified to a great extent in the 1958 conventions 
is still adequate to govern the rights and duties of those who use the 
seas. Tliis position is rejected by others who assert that emerging con- 
sensus on a number of issues at the LOS Conference has had the effect 
of estal)lishing new customary law already, and theiTfore the old ocean 
regime can no longer lx> relied on in those instances. Tliis idea has 
gained sufficient acceptance that mining iho deep seabed as a freedom 
of the high seas under the 1958 Geneva Conventions is certain to be 
challenged as a violation of emerging customary law of the sea. 

Deep seabed mining operations conducted under the aegis of the 
})roposed inteinational authority would ])robal)ly not need to l)e de- 
fended in peacetime. Tn wartime, even noncontroversial deep seabed 
mining operations Avould ])i-obal)ly liave to l)e suspended because of 
their incompatibility with large scale war at sea. 



A successful leo^al defense of seabed mining operations conducted 
outside the aegis of the proposed international authority could prob- 
ably be made, based on legal precedents found in the 1958 Geneva 
conventions, which are largely based on the premise that the seas' re- 
sources beyond the limits of national jurisdiction are the property of 
those who recover them. However, this study assumes that even if a 
sound legal defense were made, it would be insufficient protection for 
mining operations conducted under these circumstances. The tradi- 
tional practices of customary law development would force adversaries 
to challenge mining operations in other ways than filing legal papers. 
Prudence requires a plan for dealing with the contingency of both 
violent and indirect opposition if mining operations are to be con- 
ducted without reference to the new circumstances now existing. 

Within the LOS Conference the developing states want exploita- 
tion of the minerals on the deep seabed controlled by an international 
authority that would favor them in distributing the proceeds. In ex- 
change, it appears they would be willing to grant continued naviga- 
tion rights to maritime powers, most of whom are also industrial 
powers. This linkage — seabed mining issues and navigation issues — 
affect different interest groups in different ways. Third World coun- 
tries view it as an important lever to help them achieve their economic 
goals. Naval and maritime interests see it as a means of arresting 
encroachment by coastal states on the freedom of navigation. On the 
other hand, mining interests see it as mischievous since it encourages 
dispute with their own domestic maritime and naval interests. Given 
the politics of the Conference, any treaty that could be negotiated 
would probably reflect Third World desires to a greater degree than 
existing conventions do. If that occurred, those countries would be 
better able to advance their claims under "emerging" customary law 
than is now the case. 

Deep seabed mining conducted by U.S. companies in absence of a 
treaty, or in disregard of a treaty considered unacceptable by the 
U.S. Government, would be part of the claim/counterclaim, action/ 
reaction process whereby customary international law is defined. Since 
over 100 nations are committed to the principle that deep seabed 
minerals are part of the "heritage of mankind" and thus may be sub- 
ject to the moratorium on mining, a unilateral decision by the U.S. 
Government to license mining operations would probably be chal- 
lenged. These challenges might take the form of protests in interna- 
tional forums, lawsuits both in the U.S. courts and in the courts of 
foreign countries against the companies engaged in mining the seabed, 
support of political opposition within the United States against seabed 
mining on environmental or other grounds, economic or political 
sanctions, or resort to force. Since the linkage has been made at the 
LOS Conference between seabed mining and navigation rights, sanc- 
tions or resorts to force might be directed either against the miners 
themselves or against U.S. maritime commerce generally. Failure to 
respond appropriately to challenges would have the effect of abandon- 
ing the claim to the right to mine the seabed beneath the high seas. 

Coastal states unhappy over U.S. deep seabed mining operations 
could be expected to assert comprehensive jurisidiction over their 200- 
mile economic zones in retaliation. Three U.S. maritime interests would 
be adversely affected by the imposition of coastal state jurisdiction 
over the 200-mile economic zones amounting to practically the same 



8 

control as is now accepted in the territorial sea. First, naval and mili- 
taiy operations in such sensitive areas as the Mediterranean, Carib- 
bean, China. Japan, and Yellow Seas could be circumscribed to our 
disadvantasfe. Second, commercial na vibration could become subject to 
unreasonable, costly, and time consuminof interference both at sea and 
in port. Third, scientific research within the economic zones could be 
prevented or severely restricted. Retaliatory navigation restrictions 
would not be a direct challenge to the claimed right of the United 
States to mine the deep seabed. 

Since the passajre of legislation permitting interim licensing of deep 
seabed mining related acti^-ities would open the issues involved to the 
action/reaction process by which customary international law is de- 
veloped, some inquir\- might focus on our ability to respond to chal- 
lenges to our claimed right to authorize XLS. ocean mining firms to 
conduct operations. Examination of the public record of the debate on 
legislation concerning deep seabed mining reveals only minimal ref- 
erence to these considerations. However, since a large number of con- 
siderations influence relations between nations, foreign policy based 
solelv on reaction to nodule mining in disregard of other relationships 
would seem unlikely. 

Based on a number of assumptions set forth in this study, projec- 
tions of poSvSible future market impacts from deep seabed mining have 
been made for two sets of conditions : Seabed mining commencing in 
1985 and seabed mining commencino- in 1990. In each case in ordor to 
assess the possible market impact it is necessary to develop a liypo- 
thetical schedule of minesite development. Because of the highly capi- 
tal intensive nature of deep seabed mining operations — $500 million 
to ^700 million per minesite. — and the generally tight picture for avail- 
ability of large nmounts of speculative capital through the next two 
decades, it is not expected that any consortia would rapidly expand 
beyond one minesite until that site is well along toward proving its 
economic viability and reducing its indebtedness. For this reason, 
and based on the assmnption developed elsewhere that the rate of re- 
turn on investment will be in the range of 13 to 2P> percent^ it is 
assumed that each consortia would develop additional minesites at 
rouuhly 5-year intervals through the year 2000. 

Seabed minin<r commencing in 1985 is projected to be able to satisfy 
20 percent of the cumulative nickel demand during the period 1985- 
2000. 2 percent of the cumulative copper demand, 97 percent of the 
cumulative demand for cobalt, and 3 percent of the cumulative manga- 
nese deiiiand. Seabed mining commencino- in 1990 could supply 13 per- 
cent of the eumulative nickel demand during the period 1990-2000. 1 
percent of the rumulative demand for copper, 63 percent of the cumu- 
lative demand for cobalt, and 2 percent of the cmnulative manganese 
demand. The projection for seabed manganese is somewhat more sub- 
jective tlian the other metals because to date only one consortium has 
announced its intention to recover and market manganese from seabed 
nodules. 

For both scenarios of seabed mining commencement, the annual in- 
creases in seal)od nirkel production, even with relatively o]itimisti('. 
])rojections of pi'oduction levels, would not fully satisfy the amiual 
increases in demiind. This would mean that continued expansion of 

1 Wright. Itebecca Ij. Oronn Mlnlnp, An Fyconomlc Evnluatlon. Ocean Minlnf; Administra- 
tion, U.S. Dopnrtm«'nt of the Interior. May 197G, 18 pp. 



9 

production from land-based deposits would still Ix^ needed. The not 
effect of this level of seabed nickel supply on the world market would 
be to slow expansion of production from higher cost land-based mines, 
but w^ould have relatively little effect on the lower cost land-]:)ased 
mines. This would lead to a levelin^^ in the cost of nickel production. 
Xickel pricinfr, however, would be larofely tied to the cost and avail- 
ability of substitutes and possible alternative supply arranirements such 
as economic stockpiles, commodity a^rreements, et cetera. 

For copper the very small market impact that would occur would 
mostly be felt by the hiofhest cost producers such as those in the United 
States. Contrary to the case of copper, the demand for cobalt is rela- 
tively small compared to possible recovery from seabed mining opera- 
tions. It is highly unlikely tliat the full amount of cobalt contained 
in recovered nodules would actually he produced and marketed. While 
the market impact would be significant, it is difficult to predict its 
exact nature. Since both land-based and seabed cobalt production are 
byproducts of the recoveiy of other metals — and consequently have 
zero acquisition cost — the only cost involved, in an economic sense, 
would be the cost of winning the metal. However, in this case social 
and political considerations would A'ery likely override economic con- 
siderations in marketing the metal. The price structure of the cobalt 
market would be altered downward if not otherwise interfered with. 
While a reduced price for cobalt would hurt a few cobalt exporting 
countries, it would benefit the world economy in general. 

Assuming the total demand for cobalt is satisfied from seabed pro- 
duction, if seabed mining Avere to commence in 1985 and expand to IT 
minesites in the first 15 years, the projected gross value of the metals 
recovered from seabed nodules could total $5.1 billion per year by the 
year 2000 in terms of 1976 prices Avith no projected inflation. If no 
cobalt were marketed, the metal values would total $4.3 billion per 
year. These totals could be higher depending on the degree to which the 
value of the manganese product is enhanced. For nickel, copper, and 
mano-anese this would not be a major disruptive influence on the world 
metals markets, because the projected annual increase in demand 
would exceed the annual increase in seabed production. In the case of 
cobalt the reverse is tnie and the entire price structure of the cobalt 
market would likely be changed and factors other than economic con- 
siderations could be expected to have some influence. 

With seabed mining commencing in 1990 and based on 1976 prices, 
the combined value of seabed metals produced in the year 2000 would 
fall in the range of $3.1 billion to $3.9 billion, with an aA^erajre of $3.5 
billion, depending to a large extent on the cobalt market. This can be 
compared to an average gross value of $4.7 billion by the year 2000 if 
seabed mining commenced in 1985. In either case the manganese, 
nickel, and cx^pper markets would not suffer a severe impact, but it is 
unlikely that the pre.sent market value of cobalt would prevail. 

Based on the current level of participation of U.S. firms and assum- 
ing that most new entries will likely be foreign based or an interna- 
tional enterprise, the level of U.S. owned interests in ocean mining 
consortia in the year 2000 is estimated at rouo-hly 35 perc^^nt. Since 
seabed nodule production by U.S. firms would presumably be con- 
sidered equivalent to domestic primai-y production, the amounts of 
each of the four metals that may be derived from seabed mining by 



10 

U.S. firms can be estimated in terms of domestic production and re- 
duction of U.S. imports of these metals. 

Assiofning dollar values (in terms of 1976 dollars and prices with 
no allowance for inflation) to these estimates, U.S. imports of copper, 
nickel, cobalt, and manganese would total $4.2 billion without seabed 
mining, and Avould total $'2.4 billion with seabed mining in the year 
2000. The difference would be a reduction in the U.S. balance of pay- 
ments of $1.8 billion per year in the year 2000 if seabed mining began 
in 1985 according to the assumptions stated. 

Assigning the same dollar values to the tonnage estimates developed 
for the case of seabed mining commencing in 1990 yields the follow- 
ing totals for nickel, copper, manganese, and cobalt : Imports without 
seabed mining, $4.2 billion : imports with seabed mining, $2.9 billion ; 
difference or equivalent of additional domestic production, $1.3 billion. 
Comparing the dollar totals for the reduction in payments for imports 
in the year 2000, it can be seen that the gross effect on the U.S. economy 
in tenns of market impacts from seabed mining beginning in 1990 
versus 1985 would amount to a difference of $0.5 billion per year by the 
year 2000. Allowing for the possibility that these assumptions could 
be off by as much as a factor of two in either direction, this difference 
could be expressed as ranging between $14 billion and $1 billion per 
year by the year 2000. This represents the estimated saving to the 
United States for imported materials if seabed mining commenced in 
1985 rather than 1990 and developed according to the assumptions 
made. Conversely, this could be regarded as a rough estimate of the 
yearly cost to the Ignited States over the long term if seabed mining 
were to be delayed 5 years until 1990 instead of its beginning in 1985. 

These estimates are highly speculative and a major change in any 
of the variables could have a significant influence on the economic bene- 
fits to the United States from seabed mining. On the other hand, the 
same assumptions have been built into both cases, seabed mining com- 
mencing in 1985 and seabed mining commencing in 1990, so that if any 
major changes should occur, they would likely have an equal effect on 
both scenarios and tlie comparison should remain largely imchanged. 

The projections developed in this study are an attempt to provide 
some i^erspective on the possible costs and economic benefits to tlie 
United States versus time of commencement of commercial deep sen- 
bed mining. This question has been raised in the context of the im- 
mediacy of need for the commencement of deep seabed mining. How- 
ever, as has been pointed out, there are other concerns regarding the 
conditions under which seabed mining might proceed, and be viewed 
internationally, which bear consideration. 



I. INTRODUCTION 

The U.S. economy is heavily dependent on minerals for both ener<^y 
production and processed materials. In 1976 out of a ^ross national 
product of $1,685 billion, processed ener^^y minerals and materials of 
mineral origin were valued at $300 billion. With about 5 percent of 
the world's population, the United States is the world's most insati- 
able consumer of raw materials. About 40,000 pounds of new mineral 
materials are required annually for each U.S. citizen. In 1976, im- 
ports of raw materials totaled $31 billion while imports of processed 
energ}^ minerals and other processed mineral materials added another 
$20 billion. Exports of these materials totaled $19 billion that year for 
a trade deficit of $32 billion in the minerals sector. In 1975 this deficit 
was $22 billion. The increase of $10 billion in mineral imports during 
the past year was entirely in the category of raw materials. Prelimi- 
nary projections for 1977 indicate a minerals trade deficit of $44 bil- 
lion with the bulk of the increase in energy minerals. 

Although the United States is favored with vast natural resources 
of many of the basic raw materials that industry requires, it is im- 
porting increasing amounts of these materials. This increasing de- 
pendence on foreign suppliers is a growing concern and has raised 
several serious questions regarding the Nation's posture in basic raw 
materials. Among the questions are : 

{a) Is the Nation's future industrial growth likely to suffer 

from lack of adequate supplies of basic raw materials ? 

{h) Are national security interests jeopardized by reliance on 

imported strategic materials? 

(c) Is it technologically or economically feasible to attain self- 
sufficiency in basic industrial raw materials such as manganese, 
copper, nickel, or cobalt as is currently being considered for energy 
materials ? 

(d) Are cartels likely to form following the exam]:)le of 
OPEC — Organization of Petroleum Exporting Countries — as 
mineral exporting countries increase their market penetration? 

In view of these concerns, there is little argument that large new 
economically attractive sources of raw materials would be beneficial 
to the economy of the United States. In this light, research spread to 
the deep seabed nodule deposits as having significant resource po- 
tential for future development. Following the interests of private 
enterprise toward deep seabed resources, those whose concerns lie in 
the area of international diplomacy began to consider the implica- 
tions of resource development beyond the limits of national juris- 
diction. This issue was raised before the United Nations General 
Assembly in 1967. Subsequently supported by several years of prepa- 
rations and committee work, the Third U.N. Conference on Law of 
the Sea was formally opened in New York in December 1973. Among 
the broad objectives targeted for this Conference, which was expected 
to spread over a number of sessions, were the establishment of an 

(11) 



international regime for deep seabed mineral development (Commit- 
tee I) ; determination of the limits of national jurisdiction, economic 
zone, and rights regarding transit through straits (Committee II) ; 
and preservation of the marine environment and conduct of scientific 
research (Committee III). Subsequent sessions have been held in 
Caracas (lOT-i), Geneva (1975), Xew York (spring 1976), Xew York 
(summer 1976) , and Xew York (1977). 

The official goal of this lengthy series of discussions is to prepare a 
single treaty that is ''comprehensive" and will be "widely accepted." It 
has been pointed out that defining success in such terms virtually in- 
sures that the Third Law of the Sea Conference will ''fail" to accom- 
plish its "official" goal.^ Considering the 150 or so participants, coupled 
with the 25 major agenda items and many subheadings, it is highly 
unlikely that a comprehensive treaty can be widely accepted, and a 
widely accepted treaty can be comprehensive and detailed. This is not 
to say that a treaty cannot be attained, but it appears that little further 
progress can be expected unless, perhaps, agreement is reached in the 
broader context of the "Xew Economic Order" proposed by the de- 
veloping nations. 

Sinc^. the commencement of the 95th Congress, six different bills have 
l)een introduced to provide incentives for, and regulation of, deep sea- 
bed mining activities of U.S. nationals. To date, in the 95th Congress, 
hearings have been held on deep seabed mining issues by four com- 
mittees in the House and two committees in the Senate. Markup ses- 
sions liave been held on two of these bills, and one bill has been re- 
ported by two House committees. Since passage of domestic deep sea- 
bed mining legislation would have an impact on the Tliird U.X. Con- 
ference on Law of the Sea, it is hoped this study may help to provide 
some insight on some of the issues surrounding commercial recovery 
of deep seabed nodules. This study has been prepared as an analysis 
and review of resource policy and worldwide availability of the metals 
contained in the deep seabed mineral deposits, relevant aspects of 
international relations and national defense, the defensibility of seabed 
mining operations, economic considerations, and feasibility of carteli- 
/ation in the markets of metals derived from seabed nodules. 



1 Hollick. Ann. "The Third U.N. Conference on Law of the Sea : Caracas Review." In 
"The Law of the Sea : U.S. Interests and Alternatives" [Amacher, R. C. and R. J. Sweeney, 
editors 1, American Enterprise Inst, for Public Policy Research, Washington, D.C., 1976, 
19G p. 



II. BACKGROUND PERSPECTIVES 

DE^^F:I.o^MENT of Comimercial Interest ix Deep Seabed Mining 

Following their initial discovery during the Challenger expedition 
in 1872-76, deep seabed nodules were more of a scientific curiosity 
than anything of potential commercial interest until the 1950's. One 
of the first individuals to recognize the commercial potential of manga- 
nese nodules as a mineral resource was Dr. John L. Mero who authored 
a report titled "A Preliminary Report on the Economics of Mining 
and Processing Deep-Sea Manganese Xodules" ^ in 1959. 

This study had grown out of interest in a sample of nodules of rela- 
tively high cobalt content recovered near Tahiti during 1957 as part of 
the International Geophysical Year. The report, which was widely 
distributed to industrv^, indicated that nodules currently appeared to 
be economical to mine and process. Previously they had been recognized 
as a hypothetical resource, but the possibility of commercial recovery 
was only speculation. By 1962, industry interest in the United States 
had developed to the point where Kennecott Copper Corp. and Ten- 
neco Inc. (fii*st through its subsidiary Newport Xews Shipbuilding and 
Dry Dock Co. and after 1968 through a newly formed subsidiaiy, 
Deepsea Ventures) were funding ocean mining projects. 

The period from 1962 to 1968 can be characterized as the mineral 
resources research and development period with efforts confined pri- 
marily to collecting data on nodules, designing possible mining sj'S- 
tems, economic feasibility studies, and bench-scale processing testing 
on small batches of nodules collected by dredge. Expenditures were 
fairly modest by industry standards, amounting to $10 to $20 million. 

Following publication of the book ''^Minei^l Resources of the Sea'' 
in 1965, which gave estimates of trem.endous tonnages of metals con- 
tained in seabed nodules, commercial, scientific, and popular interest 
in seabed nodules became more widespread. Although it was pointed 
out that only a fraction of the estimated 1.5 trillion tons of nodules 
would prove economic to mine, this figure has frequently been mis- 
interpreted as representing the economically recoverable amount. Fur- 
thermore, additional data have since indicated that this original esti- 
mate is probably much too high.^ 

The period from 1969 to 1974 could be characterized as a period of 
preliminary engineering development of deep seabed mining systems. 
During this period, a relatively small number of companies inde- 
pendently carried out multimillion-dollar research and development 
programs which enabled them to assume leading roles in the present 
ocean mining consortia. Among the companies active in ocean mining 
development at this time were: Kennecott Copper Corp., Deepsea 

1 Mero, J. L.. "A Preliminary Report on the Economics of Mlnlnpr and Proces!=In£r Deep- 
Sea Maneranese Nodules," Institute of Marine Resources, University of Southern California, 
Jan. 1, 1959. 96 np. 

3 Pasho. D. W., "Review of the Development of Deep Seabed Manganese Nodules." The 
Northern Miner. Apr. 14, 1977, p. B6, B9, B13. 

(13) 



14 

Ventures, Inc., the International Nickel Co. of Canada, Ltd. (now 
Inco Ltd.), companies of the Sumitomo keiretsu, Metallgesellschaft 
A. G., Centre National pour TExploitation des Oceans (CENXO), 
and Lockheed ^lissiles & Space Co. It is estimated that these com- 
panies collectively spent a total of between $50 million and $80 million 
on exploration, processing, and mining technology. Of the U.S. firms, 
both Deepsea Ventures and Kennecott publicized major advances dur- 
ing this period. In 1970, Deepsea Ventures successfully tested an air- 
lift pumping nodule recovery system in 750 meters of water on the 
Blake Plateau. A hydrometallurgical processing system was developed 
at Gloucester Point. Va.. to recover manganese as well as nickel, cop- 
per, and cobalt. In 1973. Kennecott Copper Corp. operated a pilot plant 
in Lexington. Mass., Avhich processed a half ton of nodules per day. 

One firm that became connected with deep seabed mining in a 
curious manner Avas Summa Corp., owned by the late billionaire rec- 
luse Howard Hughes. For a period of time from about 1970 until 
the story broke early in 1975, Summa Corp. was apparently actively 
pursuing development of a deep seabed mining system. However, as 
it turned out, the mining venture was only being used as a cover by 
the CIA to develop a ship and technology for recovery of a sunken 
Soviet submarine containing nuclear warheads. The CIA apparently 
had arranged with Summa Corp. to contract for the design of this 
recovery system, much of which was developed by Lockheed Missiles 
& Space Co. and Global Marine, Inc., who have extensive experience 
in undersea technolosrv^ and deep-sea drilling techniques. The equip- 
ment was used in 1974 for the purposes intended by the CIA. How- 
ever, out of this venture, Lockheed has emerged as an active developer 
of deep seabed mining equipment and is now a participant in an ocean 
mining consortium. 

Beginning in 1974, a major change took place in the organizational 
arrangements under which deep ocean mining Avas to proceed. This 
change was brouirht about as companies entered into a period of prov- 
incr the technical and economic feasibility of ocean mining through 
trial mining operations of equipment ranging from one-fifth to full 
scale, and construction of demonstration processing plants. Expenses 
were increasing, and a finn international agreement on the Law of 
the Sea still had not been reached. Consequently, international mining 
consortia were formed, each of which included at least one company 
previously involved in ocean mininsr research and development, and 
several new investors were secured. The maior reasons for the evolution 
of the joint venture or consortia approach was the inability and/or 
unwillinjrness of any individual company to meet the high equity capi- 
tal investments required to demonstrate the effectiveness of its mining 
and processing svstem in view of the uncertain political climate sur- 
roundinqr development of deep seabed resources. In the absence of an 
international treatv regardinir exploitation of the deep seabed, a 
]ironder measure of support could be .♦'•ained from consoT*tia partici- 
pnnts reprosentin^sevei-nl conT^tries. Other adx'antnjres of a consortium 
arran<7omont besidos shared risk and shared investment capital include 
the pooling of diverse capabilities. 

runT^EXT STATUS OF XOUFT.K MTXTNO COXSOHTTA 

Tvpicallv, an orean mininir roTisorfinm agreement is a commitment 
in undertake a larire-seale feasibilitv studv which includes the follow- 



15 

ing elements: (1) Delineation of an ore zone suitable to meet the 
projected commercial requirements of the venture, (2) development 
and testing of an ocean mining system, and (3) development and 
testing of a processing system utilizing nodules obtained during test 
mining. The projected costs of these studies preparatory to commer- 
cialization are on the order of $40 million to $80 million for each 
major consortium depending on the scale of system testing planned. 
Currently, among the principal ocean mining groups there are four 
major consortia, a smaller national joint venture, and a sixth inter- 
national group engaged in development of a mining system but not 
committed to joint commercial mining operations. These groups are 
listed in table tl-1. 

KENNECOTT CONSORTIUM 

The first international consortium to form for commercial recovery 
of manganese nodules was the Kennecott Group. This consortium is 
managed by Kennecott which brought considerable expertise and prior 
exploration, research, and development work into the venture. A por- 
tion of Kennecott's 50 percent interest is derived from the value as- 
signed to its prior experience. The consortium envisions utilizing a 
mining system consisting of a single towed mining head with an in- 
line pumping system capable of recovering approximately 3 million 
tons of nodules (dry weight) per year. The Kennecott Group has 
been testing system components and is planning full-scale mining tests 
in 1978. An ammonia-based "cuprous ion" metal extraction process 
has been developed. 

TABLE ll-l.— OCEAN MINING CONSORTIA AND JOINT VENTURES 

Percent 
Name/companies ownership Country 

Kennecott Consortium: 

Kennecott Copper Corp 50 United States. 

British Petroleum Co 10 Great Britain. 

Rio Tinto Zinc Corp Ltd 10 Do. 

Consolidated Gold Fields, Ltd 10 Do. 

Noranda Mines, Ltd.. 10 Canada. 

Mitsubishi Corp 10 Japan. 

Ocean Management Inc.: 

Inco Ltd 25 Canada. 

Arbeitsgemeinschaft Meerestechnische gewinnbare Rohstoffe(AMR) 25 Federal Republic of 

Germany. 

Sedco Inc 25 United States. 

Deep Ocean Mining Co. (DOMCO) 25 Japan. 

Ocean Mining Association: (service contractor; Deepsea Ventures, Inc.) 

United States Steel Corp 33H United States. 

Union Minere, S.A 33^ Belgium. 

Sun Oil Co Z3]ri United States. 

Ocean Minerals Co.: 

Lockheed Missiles & Space Co (0 Do. 

Standard Oil of Indiana 0) Do. 

Royal Dutch Shell (0 Netherlands. 

Bos Kalis Westminster 0) Do. 

French Association For Nodule Exploration: 

Centre National pour I'Exploitation des Oceans (CNEXO) (i) France. 

Commissariat a I'Energie Atomique (CEA) (i) Do. 

Bureau de Recherche Geologiques et Minieres (BRGM) (i) Do. 

Societe Metallurgique Nouvelle/Societe Le Nickel (SMN/SLN) 0) Do. 

Chantiers de France Dunkerque (i) Doi 

Continous Line Bucket (CLB) Group: About 20 companies in 6 countries including 
Australia, Canada, France, Federal Republic of Germany, Japan, and the United 
States Consortium for development of mining system but not commercialization. 

> Unknown. 

Recently, Kennecott publicly disclosed for the first time, an effort 
made by the consortium over a li/2-yfear period to arrange for par- 
ticipation of Third World governments in the Kennecott ocean min- 



16 

ing consortium through a loan fund and management arrangement 
involving the World Bank.^ Apparently the president of the World 
Bank declined to proceed with this offer. 

OCEAN MAXAGEMEXT IXC. 

Ocean Management Inc. differs from most of the other consortia 
in that each of the members have considerable experience and ex- 
pertise in ocean mining and related technolog3\ ]Most of the mem- 
bers of this consortium have been participants in the CLB Group. 
^Mining tests utilizing a Sedco 445 drill ship — envisioned as suitable 
for full scale mining operations — will commence in February 1978. 
Although final plans are not complete, there are indications that this 
consortium plans to use two separate towed mining systems, each 
capable of producing slightly over 1.5 million tons (dry weight) 
per year.* A processing system capable of yielding a ferromanganese 
product in addition to nickel, copper, and cobalt is also a planned 
option. 

OCEAN JiONING ASSOCIATION 

Xone of the participants in this consortiimi have had prior experi- 
ence in deep ocean mining and, consequently, the group's mining 
system and equipment design is essentially that developed over a 15- 
year period by their service contractor. Deepsea Ventures, Inc., which 
is jointly owned by the consortium members. In addition to the process- 
ing system developing by Deepsea Ventures, however, research on 
nodule processing and manganese recovery has been conducted by 
United States Steel and I"^nion !Minere. The mining system includes 
a towed mining head and an air lift pumping process with a planned 
recovery of 1 million tons (dr\^ weight) per year. One-fifth scale 
mining equipment is now being prepared for testing in Januarv 1978 
at a minesite in the Pacific Ocean. A processinir plant is planned 
for a location on the west coast of the Ignited States. A maneanese 
produet will he produced in addition to copper, nickel, and cobalt. 

On November 14, 1074, Deepsea Ventures became the first company 
to file a claim for mining rights on the deep seabed. This claim is not 
officially recognized by any country including the United States al- 
thouirh in its official replv the State Department recognized the ricfht 
of any firm to mine the deep seabed under existing international law 
as a freedom of the high seas. 

OCEAN T^riNERAivS co:\rrAXY 

Lockheed Missiles c^- Space Co. has been quitely engaged in ocean 
mininL^ research since tlie mid-lOHO's and is presently necfotiating ar- 
rangements for a nodule mininjr consortium. Lockheed has consider- 
able experience in ocean technologv including submersibles and deep 
water oil production svstems. Lockheed's ocean mining research has 
been primarily directed toward nodule recovei-y equipment. A 1,000- 
ton-per-day mining device has been developed which is scheduled to 
under£ro sea trials in 1078. Small scale processing studies have also 



3 Sfntoincnt of Milton Sfnrn. senior vIcp prfsldont. Konnooott Conner Corp., before the 
SuhronuTiltfr'o on Oeeanoprnphy, House Committee on Merchant Marine and Fisheries, 
Apr. 2(\. 1J>77. 

* Pasho, op. clt., p. B9. 



17 

been conducted but the company has not yet conducted any deep seabed 
exploration. 

FRENCH ASSOCIATION 

In contrast to the approach taken by Lockheed, the French group 
has concentrated the majority of its etFort and limited resources on 
minesite exploration and only a modest effort toward developing min- 
ing technology-. Development of a nodule recovery system has been 
mainly through participation in the CLB Group and nodule process- 
ing research has been on a bench scale. The approach of placing heavy 
emphasis on minesite delineation apparently arises from a belief that 
prime first generation minesites are IcvSs available than generally as- 
sumed ^ and that the key to initiating an economically competitive 
mining operation is securing a rich ore zone. 

CON^riNUOUS LINE BUCKET GROUP 

The Continuous Line Bucket Group is a joint effort to develop a 
CLB system in which a line of dredge buckets travels between two 
ships and extends down to the ocean floor. Earlier efforts using one 
ship were less successful than hoped due to fouling of the line. The 
two-ship approach also offers greater flexibility in controlling the 
mining pattern. This group is organized only for the purpose of 
developing the system and does not intend to enter commercialization. 
Each of the members is free to proceed with its own plans for com- 
mercial operations. Many of the members of other consortia are also 
members of the CLB Group, and are using their participation in this 
group as a means of developing alternative mining technology in the 
event that it should prove more competitive than other methods. Min- 
ing tests are currently being conducted using the CLB system. 

COMMENCEMENT OF COMMERCIAL OPERATIONS 

In terms of progressing to commercialization, at the present time it 
appears that the Ocean Mining Association (O^NIA) , through the long 
experience of their service contractor Deepsea Ventures, is slightly 
in the lead. Optimistically assuming all goes as scheduled and no 
serious problem.s occur — either technical or political — ^the O^L^ con- 
sortium could enter into commercial operation in 1983. The Kennecott 
Consortium and Ocean Management Inc. could also proceed to com- 
mercial production about the same time. Lockheed has projected to 
begin commercial recovery in 1984. 

However, all projected schedules for the commencement of commer- 
cial ocean mining that have been made in the past consistently have 
been postponed, and indications are that the trend will continue. One 
of the reasons for the delays in commercial development has been 
somewhat greater difficulties than anticipated in scaling equipment 
designs up to full commercial size and reliable operation at actual 
minesite depths. Perhaps the major reason, however, would be an un- 
willingness and/or inability to commit the much higher level of funds 
necessary for commercial development in light of the continuing un- 
settled international status of deep seabed resource development. This 

^Thiry. H. B.. T. P. Lenoblp. ancl P. Roto]. French Exploration Smks to Define Mineable 
Nodule Tonnages on Pacific Floor. E/MJ [Engineering/Mining Journal], July 1977, pp. 

86-87, 171. 



18 

situation has led to a hesitancy or slowing of the research and develop- 
ment pace in the hope that some measure may arise to reduce the politi- 
cal risk involved. At present it would appear that projected commer- 
cialization of deep seabed mining will continue to be delayed and 
commercial operations are not likely to begin before 1985. 

Investment decisions in resource development are made by com- 
paring alternative investment opportunities on the basis of evalua- 
tions of benefit to cost or risk ratios. In the case of ocean mining, the 
benefit or profit is likely to be sufficient, but the risk is high. Invest- 
ment risks or uncertainties could be reduced by conclusion of a Law 
of the Sea Treaty clearly defining the parameters under which deep 
ocean mining might proceed. If this were to occur, there would likely 
be less hesitancy in making investment decisions to commercialize 
ocean mining projects — although the decisions may be not to invest 
at all depending on the treaty provisions. Domestic legislation, as has 
been supported by U.S. mining interests, is another mechanism for 
reducing investment risks and removing hesitancy in making major 
financial commitments in ocean mining. A third factor which would 
improve the benefit/risk ratio would be an increase in benefits. If a 
situation were to develop where the prices of the metals contained 
in deep seabed nodules were to increase significantly, investment in 
commercial ocean mining operations would rapidly proceed despite 
the present political uncertainties. The development of any of these 
factors would affect the commencement of commercial ocean mining 
projects. 

Third U-IST. Law of the Sea Conference — Background, 
De\^lopment, and Progress 

The current Law of the Sea Conference, which was initially con- 
vened in 1973, is the third plenipotentiary meeting sponsored by the 
United Xations with the goal of drafting treaty law to address certain 
unresolved problems developing from the increased use of the oceans 
and their resources. This section will sketch the backirround and prep- 
arations for the third Conference, trace its evolution over the past 
4 years, and identify the issues that have posed difficulties for confer- 
ence negotiators, focusing on deep sea mining. It is not intended to be 
a compre]ionsi\'e treatment of the Conference and its issues. 

One of tlio primary goals of the Conferenco is to formulate a legal 
reofime for the exploration and exploitation of resources from the area 
of the oceans beyond national jurisdiction and to establish an inter- 
national governmental organization that will implement this regime. 
Conference negotiations on a comprehensive treaty will also define 
the areas of the oceans within national jurisdiction and set forth legal 
stauflards for the i-osolution of conflicts over activities in these areas. 
Conference decisions on the lattei- -will detei-mine the dimensions of 
the area l)oyond national jurisdiction. 

previous conferences 

The first United Xations Conference on the Law of the Sea, con- 
vened in Geneva in Febniai-y ^9r^8. climaxed 7 years of studv within 
the U.N. International Law Commission on various topics relating to 



19 

the law of the sea. The Final Act of the Conference, adopted by dele- 
gations from 86 countries on April 29, 1958, included four conventions : 
The first on the territorial sea and the contifnious zone; the second 
on the high seas; the third on fisheries and the preservation of the 
biological resources of the high seas; and the fourth on the Continen- 
tal Shelf. 

The 1958 Conference is of special significance to this study lx'caus(! 
resource exploration and exploitation in the high seas, under the 1958 
Convention on the High Seas, is subject to article 2 of that treaty : 

The high seas being open to all nations, no state may validly purport to subject 
any part of them to its sovereignty. Freedom of the high seas is exercised under 
the conditions laid down by these articles and by the other rules of inter- 
national law. It comprises, inter alia, both for coastal and noncoastal states : 

(1) Freedom of navigation ; 

(2) Freedom of fishing ; 

(3) Freedom to lay submarine cables and pipelines ; 

(4) Freedom to fly over the high seas. 

These freedoms, and others which are reco^ized by the general principles of 
international law, shall be exercised by all states with reasonable regard to the 
interests of other states in their exercise of the freedom of the high seas. 

The 1958 Conference failed to reach agreement on two of the im- 
portant questions submitted to it : The breadth of the territorial sea 
and fishing zone limits. At its request the U.N. General Assembly 
called a new conference to deal with the points left unsettled. 

The Second United Nations Conference on the Law of the Sea met 
at Geneva in INIarch and April 1960. The final vote on a compromise 
proposal providing for a 6-mile territorial sea limit with an additional 
6-mile fishing zone when certain conditions were met fell one vote 
short of the required two-thirds majority of those present and voting. 

THE MALTA IXITIATPVE 

Thus, in 1967, international treaty law of the sea was based on 
documents formulated a decade before and on legal principles devel- 
oped even earlier. In addition, since all of the issues before the 1958 
and 1960 Conferences were not resolved, the silence, vagueness, or 
ambiguity in some of the treaties invil xl unilateral extensions of 
jurisdiction into the high seas by nation states. 

For example, in 1958, the number of states claiming a territorial 
sea of 3 miles was twice the number claiming a territoral sea of 12 
miles while, in 1968, the number claiming 3 miles was one less than 
the number claiming 12 miles. 

NUMBER OF STATES/TERRITORIAL SEA CLAIMS 

1 1958 2 1968 « 1977 

Nautical miles: 

3 

6 . . 

12 

200 ::. 

' Based on information in a table of jurisdictional claims prepared by the United Nations, dated Apr. 3, 1958 and included 
in U.S. Naval War Colleee; International Law Studies, 1959-60: The Law of the Sea: Some Recent Developments by Carl M. 
Franklin, v. 53, Washington, U.S. Government Printing Office, 1961, pp. 273-287. 

2 Based on information in Food and Agriculture Organization. Limits and Status of the Territorial Sea, Exclusive Fishing 
Zones, Fishery Conservation Zones and the Continental Shelf, Rome, 1968 (FAO Fisheries Technical Paper No. 79) pp. 3-23. 

' Information from a State Department listing of National Maritime Claims, Mar. 8, 1977, 



22 


30 


28 


12 


16 


8 


11 


31 


59 


1 


4 


10 



20 

In addition, in 1977, only 10 countries liad fishing limits of o miles, 
while 59 had fishing limits of 12 miles and 37 had fishing limits of 
200 miles. 

On August 17, 1967, the U. N. Representative from Malta called 
for JJS. preparation of a declaration and treaty that would reserve 
the seabed and ocean floor as the common heritage of mankind and 
establish a system in which all countries, rich and poor, landlocked 
and maritime, would benefit from the resources lying on and under the 
ocean floor. When Ambassador Arvid Pardo, then Malta's representa- 
tive, initiated General Assembly discussion of this issue on Novem- 
ber 1, 1967, he indicated that current and future technological break- 
throughs making the seabed and ocean floor more accessible and 
exploitable would "lead to a competitive scramble for sovereign rights 
over the land underlying the world's seas and oceans, surpassing in 
magnitude and in its implication last century's colonial scramble for 
territory in Asia and Africa." ^ This process of national appropriation 
would — 

(1) result in inequitable allocation of food, fuel, and mineral 
resources ; 

(2) have a negative impact on land-based mineral resources: 
fB) include the increased use of the seabed and ocean floor for 

military purposes, accompanied by an intensified arms race in 

the deep ocean area ; and 

(4) result in increased pollution of the marine environment, 

including radioactive pollution. 
The Assembly responded to Pardo's call by creating, in what has 
become known as the Malta Resolution, an ad hoc committee of 35 
nations to studv the scope and various aspects of "the question of the 
reservation exclusively for peaceful purposes of the seabed and ocean 
floor, and the subsoil thereof, underlying the high seas beyond the 
limits of present national jurisdiction, and the uses of their resources 
in the interests of mankind." (A/RES/2340(XXII), Dec. 18, 1967.) 
This committee met in three scissions during 1968, creating two work- 
ing groups of the whole to deal with (1) economic and technical 
matters, and (2) legal aspects. Its report to the 1968 General Assembly 
stressed the need for more study, including a consideration of military 
implications. The ad hoc committee also started to develop a draft 
doclarntion of jjeneral principles and draft statement of agreed prin- 
ciples but felt that further elaboration would be premature. In 1968, 
the Assembly transformed the ad hoc committee into a standinrr com- 
mittee of 42 members to study issues regarding the problem of inter- 
national cooperation in the exploration and use of the international 
seabed area and its resources. 

THE SEABED COMMITTEE AND ITS ACHIE\^=::^fENTS 

1969-70: More Study 

Tho Committee on the Peaceful Uses of the Seabed and the Ocean 
Floor Beyond the Limits of National Jurisdiction, usually referred 
to as the Seabed Committee, operated during the years 1969 and 1970 
as a study committee with specific functions allocated to it by the 
General Assembly. The 42-member unit met in four sessions in 1969 

• DnltPd Nations document A/C.l/PV. 1510, pp. 57, 58-60. 



21 

and two in 1970. It created two subcommittees which paralleled the 
working groups of the ad hoc committee both in function and in name. 
In addition to the task of formulating legal principles for inter- 
national cooperation in the international seabed area, the committee 
engaged in extensive discussions of the issues before it and received 
a number of proposals and working papers, including- the U.S. draft 
of a U.X. convention on the international seabed area in 1970." 

The 19G7 Malta Resolution had included consideration of the mili- 
tary aspects of increased deep seabed ac<:ess. In August 1908, the 
Eighteen Xation Disarmament Conference ^ decided to consider the 
question of drafting an international agreement to prohibit the em- 
placement of nuclear weapons and other weapons of mass destruction 
on the seabed and ocean floor. The Seabed Committee was to study 
furtlier the allocation of the seabed and ocean floor for exclusively 
peaceful purposes, taking the disarmament negotiations into account. 
However, most often the military aspects of seabed and ocean floor 
access received scant attention in the Seabed Committee discussions. 
In 1970, a Treaty on the Prohibition of the Emplacement of Xuclear 
"Weaix)ns and Other Weapons of Mass Destruction on the Seabed and 
the Ocean Floor and in the Subsoil Thereof was presented to the 
General Assembly and approved. The treaty entered into force on 
May 18, 1972, after appropriate ratifications.^ 

In 1970, the 25th session of the General Assembly, by a vote of 108 
in favor (including the United States), none against, with 14 absten- 
tions, adopted a Declaration of Principles Governing the Seabed and 
the Ocean Floor, and the Subsoil Thereof, Beyond the Limits of 
National Jurisdiction. This 15-point declaration recognized that the 
"sea-bed and ocean floor, and the subsoil thereof, beyond the limits of 
national jurisdiction * * *, as well as the resources of the area, are 
the common heritage of mankind." ^° 

The Assembly also decided to convene in 1973 a conference on the 
law of the sea and enlarge the Seabed Committee to 86 members, 
with a mandate to prepare for the conference. This resolution, which 
was adopted by a vote of 108 in favor (including the United States), 
7 against (including the U.S.S.R.), with 6 abstentions, provided that 
the conference would — 

deal with the establishment of an equitable international regime — including an 
international machinery — for the area and the resources of the seabed and the 
ocean floor, and the subsoil thereof, beyond the limits of national jurisdiction, 
a precise definition of the area, and a broad range of related issues, including 
those concerning the regimes of the high seas, the continental shelf, the territorial 
sea (including the question of its breadth and the question of international 
straits) and contiguous zone, fishing and conservation of the living resources 
of the high seas (including the question of the preferential rights of coastal 
States), the preservation of the marine environment (including, inter alia, 
the prevention of pollution) and scientific research. 



" In 1969. the U.N. General Assembly adopted a resolution -which declared that, pending? 
the establishment of an Internatlonar regime, states and persons were bound to refrain 
from all activities of exploitation on the seabed beyond the limits of national .iurisdiction. 
The United States was amonpr the 28 nations voting ag^ainst this "moratorium" resolution. 
[See section on "common heritage" for discussion of impact of this resolution.] 

8 In 1969. the name was changed to Conference of the Committee on Disarmament (COD). 

" In June 1977. the states party to the treaty met in Geneva to review the operation of 
the treaty. The Final Declaration of the Seabed Arms Control Treaty Review Conference 
requested the CCD to "proceed promptly with consideration of further measures in the 
field of disarmament for the prevention of an arms race on the seabed, the ocean floor, and 
the subsoil thereof." 

^° See later section for discussion of the common-herltage-of -mankind concept. 

20-211—78 3 



22 

Years 1971 through 1973 : Preparation for the Conference 

AMien the Seabed Committee reconvened in 1971. it had been doubled 
in size and given the task of preparing draft treaty articles and 
a comprehensive list of subjects and issues for the Conference. The 
preparations for this Third U.N. Conference on the Lav/ of the Sea 
were substantially different from those for the first Conference 
in 1958. The International Law Commission, a select body of inter- 
national law experts acting in their individual capacities, spent T 
years in the drafting of 73 articles which formed the basis of the 
four treaties adopted b}' the 1958 Conference. 

The Seabed Committee, by comparison, was primarily a political 
entity, composed of national delegations with varying levels of ex- 
perience and knowledge of international law and oceanography. The 
most positive result of the Committee deliberations was the process 
of debate and discussion which (1) identified the complexity of the 
Conference undertaking: (2) revealed the issues which vrould chal- 
lenge the Conference; and (3) initiated within each nation tlio internal 
political processes requisite for the successful development of an inter- 
national agreement. 

The Committee in 1971 reorganized itself into three subcommittees ^^ 
with the following functions : 

Suhcommfttee 1. — Development of treaty articles establishing an 
international regime and international machinery for the area and 
resources of the seabed and ocean floor beyond the limits of national 
jurisdiction, and bearing in mind the 1970 Declaration of Principles 
adopted by the General Assembly : 

^}{bcammiftee 2. — Preparation of a comprehensive list of subjects 
and issues relating to the law of the sea and draft treaty articles 
thereon : 

Ruhcowwiftee S. — Preparation of draft treatv articles on the pres- 
ei'vation of the marine environment and scientific research. Tn 197*2, 
the issue of ti*ansfer of technologA^ was added to those under considera- 
tion in Subcommittee 3. 

The Seabed Committee met in two loncfthv sessions duriiig each of 
the 3 years of its preparatory phase. Tn addition to general debate and 
discussion, tlie Committee and its subcommittees gave careful attention 
to numerous pro])osed conventions, treaty articles, and workin<.v papei's. 
Tn 1972 the Committee completed and approved a list of subiects and 
issues T-elating to the law of the sea. The list consisted of 25 headings 
and sevei'al sublieadiim's under more than half of those main topics. 
Tt was to serve as a fi-amewoi*k for the discussion and drafting of 
ai-ticles but was not intenrled to establish the order of priority for 
consideration of the various subjects and issues and was not to be 
considen'd necessarily complete. 

Tn 1973 Sulx'ommittee 1 of the Seabed Committee developed a 114- 
yiage collection of draft ai-ticles settinir foi*th alternative texts for 
n reirime and mnchineiw for the international dee]) seabed areal>eyond 
nationn! jui-isdiction. The wide range of proposed texts illustrated 



^1 E;ich of th'««p vubcomraltteea wns trnnRformed to n comnilttpp of flip ronforencp whon 
It «onvf>nP(I In 1973. 



23 

the differing interpretations derived from the "Declaration of Prin- 
ciples Governing the Sea-Bed and the Ocean Floor'- adopted by the 
General Assembly in 1970. The major areas of divergent positions in 
Subcommittee 1 in 197»i foreshadowed the major areas of disagi-eement 
in Committee 1 of the Conference in 1977 : 

— The nature of the exploration and exploitation system for deep 
seabed area resources ; 

— Functions and powers of the international authority; 

— Nature of the decisionmaking process in the authority. 
The final report of the Seabed Conunittee, submitted to the General 
Assembly in 1973, was to serve as the basis for Conference negotia- 
tions. In addition to the aforementioned compilation from Subcom- 
mittee 1. it contained a comparative table of pr()j)()sa]s. declarations, 
working papers and so on relating to subjects and issues allocated to 
Subcommittee 2 and the consolidated texts of proposals allocated to 
that Subcommittee. Thus, when the Conference started, it did not have 
before it a completed comprehensive treaty text that could serve as 
the basis of negotiation. 

On November 16, 1973, the TT.N. General Assembly, by a vote of 
117 in favor (including the United States), none against, with 10 
abstentions (the Soviet Union and bloc countries plus I^razil and 
Portugal), set the dates, locations, and functions of the Conference. 
The first session was to convene in December 1973 for the purpose 
of dealing with matters relating to the organization of the Conference. 
The second session was to meet between June and August 1974 for 
the purpose of dealing Avith the substantive work of the Conference. 
Subsequent sessions of the Conference, at least through the end of 
1975, were anticipated before adoption of a "convention dealing with 
all mattei-s relating to the law^ of the sea * * * and bearing in mind 
that the problems of ocean space are closely interrelated and need to 
be considered as a whole." ^- In addition, the Assembly dissolved the 
Seabed Committee to take effect at the start of the Conference. 

U.S. policy development in the Seabed Committee 

There had been U.S. expressions of support for a rational inter- 
national oceans policy before the Malta initiative at the United Nations 
in 1967. In 1966 President Lyndon B. Johnson warned against the 
creation of "a new form of colonial competition among the maritime 
nations" : 

a race to grab and to hold the Linds under the high seas. We must insure that 
the deep seas and the ocean bottoms are, and remain, the legacy of all human 
beings. 

In addition to presenting to the Seabed Committee in 1970 a draft 
convention on the international seabed area, the United States, be- 
tween 1971 and 1973, submitted a series of draft articles and working 
papers on several of the law of the sea issues. The following chart 
compares the U.S. position on major LOS issues in 1973 as the 
Conference opened with the U.S. position in 1977 : 



" U.N. General Assembly resolution 3067 (XXVII), Nov. 16, 1973. 



24 



1973 

Accopfance of a 12-mile territorial 
sea limit, conditioned on free transit 
through and over straits used for inter- 
national navigation. 

Coastal State jurisdiction over fish- 
eries and host State management and 
preferential rights to anadromous 
si>ecies both throughout their migratory 
range ; no geographic limits were given ; 
highly migratory species would be man- 
aged by international or regional orga- 
nizations. 

Coastal State exclusive resource man- 
agement jurisdiction over seabed re- 
sources in a coastal seabed economic 
area, the outer limit of which was left 
unsi)ecified ; revenues from exploitation 
of part of the area would be shared 
with the international authority. 

A system of licensing by international 
authority for the exploitation of deep 
seabed resources subject to conditions 
established in the treaty. 

Creation within an international au- 
thority of an assembly, with broad rec- 
ommendatory powers, and a council, 
with fundamental control over the 
operations of the authority. 

Establishment of (1) international 
standards for vessel-source pollution 
with flag state and port state enforce- 
ment provisions and (2) minimum in- 
ternational standards for activities 
under their jurisdiction. 

Establishment of a set of obligations 
for the conduct of scientific research in 
the areas beyond the territorial sea 
within tlie coastal economic area ; these 
obligations would be in lieu of coastal 
state consent requirements. 

System of dispute settlement machin- 
ery. 



19; 



Same. 



200-mile exclusive economic zone, in- 
cluding coastal State jurisdiction over 
living resources in zone : highly migra- 
tory species managed by international 
or regional organizations. 



200-mile exclusive economic zone in- 
cludes coastal State jurisdiction over 
seabed resources, acceptance of coastal 
State jurisdiction over continental shelf 
(requires precise definition) when it 
extends beyond 200 miles, and sharing 
of profits with international community. 

System of dual access by States and 
private entities and by the Enterprise, 
subject to conditions established in 
treaty ; access would be nondiscrimina- 
tory. 

Same. 



Same. 



Same for exclusive economic zone. 



Same. 



THE CONFERENCE — 19 73 THROUGH 1U77 

The first session of the Third U.N. Law of the Sea Conference, 
meeting at U.N. Headquarters in New York City December 3-15, 
1973, soiiglit to set down its organizational framework. It adopted 
the Conference agenda, established its committee structure, and elected 
its officers but was unable to reach final agreement on its rules of 
procedure. An impasse developed over the method to be used by the 
(yonferencc in reaching decisions in matters of substance, whether 
])y the con.sensus approacli called for in the "gentlemen's agreement" 
or by a two-thirds majority vote of states participating in the Con- 
ference.^^ The impasse remained outstanding, to be resolved during 

^ LI 'I'l,,. "^rontlcnicii's nproomont." •uhlch lind boon approved by the Genornl Assembly In 
NovoiiiIkt 1!>7;{. Is: "KocOK'nlzlnp that the Conference at Its Inauj^ural session will adopt 
Its procodures, Incliidinf; Its rules roKardlnK methods of votlnj? and bearinp: In mind that 
the i»r<)liloms of ocean s|)a('e are elosely Interrelated and need to he considered as a whole 
and tho doslrahlllty of adopllntj a Convention on tlie Law of the Sea which will secure the 
widest: [tosslhle accei>tanco, tlie (Jeneral Assembly expresses tho view that the Conference 
should iriake every effort to reach MKreement on substantive matters by way of consensus; 
that tliiTo should l)o no volinu on such nmttcrs until all olTorts at consensus have been 
exhausted ; and further expresses tho view that the Conference at its inaupural session 
will consider devlsiD); appropriate means to that end." 



25 

the first week of the second session, in the summer of 1974. At that 
time, the Conference, by consensus accepted the principles of the 
gentlemen's agreement, establishing procedures for the development 
of consensus before finally resorting to voting, which was to occur only 
when all efforts at consensus had been exhausted. Votes on questions 
of substance in plenary sessions required two-thirds of those present 
and voting which must be a majority of those participating in the 
Conference. 

The second session of the Conference was held in Caracas, Venezuela, 
June 20 through August 29, 1974. This was the first session to deal 
with the substantive issues before the Conference and much of the 
10- week period was filled by general debate expositions of views on 
Conference issues — first in plenary and then in committee meetings — 
and on the furtlier presentation of draft articles and working papers. 
It was also the first opportunity for the many new participants in the 
Conference to become acquainted with LOS issues and procedures.^* 
This session did not produce a text of treaty articles but progress 
was made in the reduction of alternative texts and the narrowing of 
areas of disagreement in all three committees.^^ During General As- 
sembly consideration in the fall of 1974 of the Law of the Sea Con- 
ference and the convening of the 1975 session, the U.S. representative 
indicated his interpretation that the Conference had been mandated 
by the Assembly in 1974 to complete its work in 1975. ^Vhile he noted 
that "timetables * * * are not immutable," he observed the prob- 
ability that with more delay "the passage of time and not our own 
efforts miay well determine the outcome of our negotiations." ^^ 

The third session of the Conference was held in Geneva, Switzer- 
land, from March 17 through May 9, 1975. This was a negotiating 
session, with few formal meetings and no general debate. At the con- 
clusion of the session, the chairman of each committee produced an 
informal, single negotiating text (SXT) which, when put together, 
provided a single text covering all subjects before the Conference. The 
SXT did not represent agreed-upon articles but it did indicate the 
direction of negotiations and served as the starting point for discus- 
sions at the next session. Thus, for the first time the Conference had 
one article or set of articles on an issue rather than a collection of 
alternative texts. At the end of the session Conference President Amer- 
asinghe appealed to all states to "refrain from taking any action, 
and also to use their powers to restrain their nations from taking 
any action or adopting any measures, which Avould place in jeopardy 
the conclusion of a universally acceptable treaty of a just and equitable 
nature." ^^ 

The fourth session of the Conference was held in Xew York City 
at TT.X. Headquarters from March 15 to Mav 7. 1976. This session 
produced a revised single negotiating text (RSXT) to ser^^e as the 



14 Deloentions to the Seabed Committee, with its 90 members, had already developed a 
familiarity Tvith the terminology and sr-ientific. lejral, and economic frnmework and impll- 
cntions of LOS issues. However. Conference participation was extended to at least 138 
nations an^l to other non-nation entities. 

1^ Committee 1 deals with development of an international resrime or principles for the 
exploration and exploitation of the deep seabed and provides for the establishment of 
international machinery to implement the re.srime. Committee 2 deals with the develop- 
ment of creneral law of the sea issues, such as territorial sea. straits, the Continental 
Shelf, fisheries, the hiqrh seas, archinelacroes. Islands, and the ricrhts of the land-locked, 
shelf-locked, and broad-shelf states. Committee 8 focuses on the protection of the marine 
environment, scientific research, and transfer of technolojry. 

19 Stevenson. John B. Statement In Plenarv. U.S. Mission to the United Nations, press 
release. (USTTN-202f74>, Deo. 17. 1974.) 

"United Nations press release SEA/1S3. May 9, 1975, pp. 3-4. 



26 

basis for future negotiations. In general outline this text was more 
refined than the SXT and in substance parts of it were more responsive 
to the interests of developed countries. In a press conference on May 7, 
U.S. Eepresentative T. Vincent Learson expressed the hope that tlie 
negotiations on all basic issues could be completed at the fifth session 
of the Conference. 

The fifth session of the Conference was held in New York from 
August 2 through September 17, 1976. The second meeting in 1976 
produced no new texts ; in fact, many observers considered that prog- 
ress at tlie Conference negotiations had ceased and that, in some re- 
spects, the goal of a comprehensive treaty was made more remote. 
Tlie deadlock that resulted at this session developed primarily from 
the Group of 77 ^^ }X)sition that the system of exploitation set forth 
in the RSXT was not acceptable. Negotiation on issues not yet resolved 
was postponed. The polarization that ensued continued despite efforts 
to resolve the Connnittee 1 logjam. However. Committee 2 and 3 texts 
were clarified on many issues. 

The sixth session of the Conference was held in Xow York from 
!May 23 throuirh July 15, 1977. Informal consultations aimed at end- 
ing the deadlock on seabed mining issues had been held between 
February 28 and March 11, 1977, in Geneva, Switzerland, under the 
chairmanship of Jens Evensen, Norway's minister for law of the sea 
issues. The entire Confei'ence directed its attention to this isv^ue for its 
first 3 weeks of the sixth sessioii and under Evensen's leadership texts 
were developed on majoi- seabed issues. Thei'eafter, each committee 
of the Conference proceeded with its work. After the conclusion of 
the session an informal composite nej^otiating text (ICNT) Avas dis- 
tributed (on July 20) : this was another in the series of single treaty 
texts prepared by committee chairmen and the Conference pi-esident 
to serve as the basis for further negotiations. This text showed projr- 
ress in many areas. In format, it was closer to the organization of a 
treaty: draft articles were no longer organized by committee but 
integrated into treaty parts. 

DKVKLOr^rEXT OF THE LAW OF TFfF SKA TIJKATY '. 107.", THROrCTI 10 77 

Brief descriptive paragraphs identifying the bare facts and trends 
of the various sessions of the Conference, while important, do not 
reveal what is the real meat of the Conference : the substantive projr- 
ress toward agreement on a treatv. ^^Hiat issues have been resolved? 
^^^lat issues are still ])ending? Why is the development of acceptable 
trciity texts on some issues such an elusive undertaking? 

At this date most of the ireneral law of the sea isvsues ha\e Immm) set 
forth ill generally acceptable ti'eaty articles."^^ The following chart 
identifies only the major issues as resolved or not resolved. Placement 
in the T-esolved category does not mean that the articles in the ICNT 
a?'e etched in stone, onlv that the text, as formulated bv the connnittee 
ehairmnn. will in all likelihood closely resemble the final text of the 
ti-eaty if the Con reiciicc^ :Hh)])ls a ti-eaty. 



■''' Tlio Orniin of 77 <^r,77"» ronxists of nonrlv 1 1 Ti rlovolon^nc Third World nntlons which 
ofton ntnlntaln n iinlflod pronrrnnjrr'd sot of ohjocUvos nnd tnrtlfs on n immher of Intor- 
iinHon'il ls«ii»'«i 

■"• Throncrhonf dlsfM«v|rviis on dovolopnionf '^^f Ironty foxf". forms fqnlvnlont to "tron- 
fT.illv .'irri'titnldo'" will l)o iisod. This torni slcrnlflos that rnnforonro pnrtlolrmnts hnve 
forfnod sonrip doproo of ronsmRns nhoiit thrso f(^Tt<i. No votos hnvo ocrnrrod at tho Pon- 
foronfo nnd nndor Poiifctviiro rnlos no votos will lako plnco tintil tho ontiro treaty pafkncro 
has hcP'Ti forninlatod. 



27 



RESOLVKI) 
Tlie international area and its re- 
sources are the common heritage of 
mankind. 

Estaltlisliment of an international 
seabed authority, with council, assem- 
bly, and enterprise. 

12-mile territorial sea, 200-mile exclu- 
sive economic zone, and transit through 
straits used for international naviga- 
tion, (ieneral rules for the delimitation 
of tlx' baseline for measurement of the 
territorial sea. 



Definition of an archipelagic state. 



Definition of the continental shelf to 
include the continental margin : desig- 
nation of a percent of the revenue from 
activities on the shelf beyond 200-mile 
zone for international community use. 

Coastal state jurisdiction over land- 
based pollution and pollution resulting 
from seabed activities. International 
standards for protection of the marine 
environment in the zone, with flag state 
and port state enforcement rights and 
coastal state rights when international 
standards are violated in the zone. 

Coastal State will have jurisdiction 
to conduct marine scientific research in 
its territorial sea, within its economic 
zone, and on its continental shelf. 

There should be appropriate settle- 
ment of dispute procedures. Including 
the use of the International Court of 
Justice, a Law of the Sea Tribunal, 
and special arbitral procedures. Use of 
a Seabed Dispute Chamber having ex- 
clusive and compulsory jurisdiction 
over all disputes under part XI of the 
ICXT. 



NOT RESOLVED 

IIow the "common heritage" concept 
should be implemented, including sys- 
tem of exi)loitation and basic conditions 
for exploration and exploitation. 

Functions and de(;isi(jnniaking [)ro- 
cedures for various organs of the au- 
tliority. including as.sembly, council, and 
enterprise. 

Relationship of the high seas regime 
to the exclusive economi(,' zone; delimi- 
tation of tlie zone, territorial sea, and 
continental shelf between adjacent or 
opposite states ; access of land-locked/ 
geographically disadvantaged states to 
living resources of the zone or region. 
Appropriate regime for highly migra- 
tory species, including marine mam- 
mals. 

Right of the archipelagic state to 
draw straight baselines between the 
outermost points of the outermost is- 
lands to delimit national waters and 
other aspects of the archipelagic water 
regime. 

Precise definition of the outer edge of 
the continental margin. 



International authority jurisdiction 
over pollution in the international area. 



Coastal state consent regime for 
marine research by other states in the 
zone and on the shelf. 

Exact details of the dispute settle- 
ment procedures and mechanisms and 
their application in si>ecific circum- 
stances. 



Dl-fflculties of Negotiation on Deep Seahed Issues 

As lias been noted, development of a reo:ime and or<ranization for 
the deep seabed and its resources is a major unresolved issue before 
the Conference. On the other hand, several general laAV of the sea issues 
have for the most part been ag-reed upon, includino- a 12-mile terri- 
torial sea limit, free transit throu<>-h straits used for international na\'i- 
gation, and a 200-mile economic zone. These issues either affect current 
unilateral extensions of national jurisdiction or involve coastal state 
acquisition of currently retrievable economic resources. These two 
factors were amono- those motivatincr countries to develop widely 
accepted treaty articles on general LOS issues in a timely fashion. 
Based on the general acceptability in the Conference of a 200-mile 



28 

coastal state jurisdiction over economic resources, a number of states 
have extended jurisdiction over fisheries to 200 miles. 

However, commercial exploitation of hard mineral resources from 
the deep seabed is not expected to take place before 1985. Develop- 
ment of a regime and organization to manage use of this international 
area represents an effort to establish international law standards }">efore 
rather than after economic activity in the area has started. These 
issues appear to have been more susceptible to the ideological struggle 
of the Xorth/South confrontation which developed as the Conference 
opened. 

Access to new sources of mineral resources, the relation of that access 
to land-based resources, and the appropriate stnicturing of the inter- 
national institution which would regulate exploration and exploitation 
of resources in this area have become linked with tlie demands of the 
New International Economic Order of the Third World.-° At the same 
time, fears of the industrialized countries brought on by the oil em- 
bargo of 1973-74 and bv the "tyranny of the majority" actions of third 
world nations in the United Nations and some of its agencies have 
caused them to exercise caution in the negotiations. The atmosi>here 
of mutual trust and confidence being absent at times, efforts to break 
the continuing deadlock have failed. 

Beeiy Seabed Mining : Goals and Proj)osaIs^ 1977 

In general. Group of 77 nations have sought, during the Conference, 
a system of exploitation which would guarantee to them bmefits — 
capital and technolog}^ — from use of the international area. In addi- 
tion they have supported development of an international organiza- 
tion which would — 

(1) guarantee to them a strong voice and role in how and who 
would have access to the international area ; and 

(2) protect them — those who are land-based i^roducers of the 
same minerals found in the nodules — from adverse economic 
effects of seabed mininjr. 

On the other hand, the United States, as an industrialized country 
with significant deep sea mining interests, has sought a system of 
exploitation which would guarantee nondiscriminatory access to the 
(\qo]) seabed under specified, fair and objective conditions. ^Moreover, 
it has sought the establishment of an international organization which 
would generate confidence and respect among all nations to su]^ervise 
exploration and development of the international area. The powers 
of the Authority would be devised so as to foster investment, motivate 
transfer of technology, and result in financial benefits to developing 
countries. 

One niifrht characterizo the texts on the regime and international 
organization to develop the international area prepared by the chair- 
]nan of r'oinmittee 1 over the past '?> years as moving like a pei^.dulum, 
first toward a text favorable to developing nations (1975 SNT), then 
toward a text fa^•o]•ablc in some res])octs to develop'Hl couTitries (1970 
ESXTV and lastlv, toward a text favorable to developinir nations 
(1977 TrNT).=^ 



-" For flirt lior dlsfiisslon of this poliif. soo Oxinnn, Bornnnl II. Tlio Third Unitorl N.-ifJons 
ronfcrc'jff on fh«> I.mw of the Sen : Tho lOTH Now York Sessions. Ainorlcnn Journjil of 
Intprnntlonal Linv. v. 71. No. 2. -April 1977 : 251-2;'^. 

!^ Sf'o. for cxaniplo. TInlfrht. O. W. I.uw of tho Son Conforonre — Why Paralysis. Journal 
of Mnrltlmo Law and Comniprco. v. S, No. 2. April 1977 : 2S4-2S5. 



29 

The KSNT (1976) provided for access both by the Authority, 
throii^li its operatiiiir arm, the Enterprise, and by states and then- 
nationals under conditions specified in the treaty. It established a 
system (dual access and banking system) under which prime mining 
sites would be reserved for exploitation by the Enterprise or develop- 
ing countries. It contained special provisions, including an interim 
production limit, to protect land-based producers, and established pro- 
cedures for the Assembly designed to protect the interests of all. 

However, the RSNT (1976) contained the SNT (1975) text on the 
Council, its composition and voting procedures, since this issue was not 
discussed in Connnittee 1 during the fourth session of the Conference. 
In general, the RSNT (1976) appeared to clarify and equalize the 
relationship between the Enterprise and states and tlieir nationals as 
co-exploiters. However, the Committee 1 portions of the ICNT (1977) 
(located in part XI) were different from those in the RSNT (1976). 
According to Conference President Amerasinghe, the changes made 
effectively gave "a higher status to the role of the Enterprise as an 
operating entity A'is-a-vis states parties and other entities." ^^ 

The portions of tlie ICNT (1977) that deal with the international 
area and with deep sea mining are "Part XL The Area.'' "Annex IT. 
Basic Conditions of Exploration and Exploitation," and "Annex III. 
Statute of the Enterprise." The following is a summaiy of only the 
major elements of the ICNT on the international area and a chart 
identifying the basic structure of the international Authority and its 
functions. 

Xo state is to claim or exercise sovereignty or sovereign rights over any part 
of the Area or its resources. All rights in the resources of the Area are vested in 
mankind as a whole, on whose behalf the Authority shall act. Xo state or person 
shall claim, acquire or exercise rights to the minerals of the Area except in 
accordance with the Convention. 

Activities are to be carried out in the Area so as to insure : 
— orderly and safe development and rational management of the resources ; 
— expanding opportunities for participation by developing countries in sea- 
bed activities and for transfer of technology to LDC's ; 
— transfer of revenues and technology to Authority ; 

— just, stable, and remunerative prices for raw materials also produced 
outside Area and increase in availability of minerals to promote equi- 
librium between supply and demand ; 
— security of mineral supply to consumers ; 

• — enhancing of opportunities for all states parties to participate in develop- 
ment of resources and preventing monopolization of activities ; 
— protection by the Authority of developing countries from any adverse 
effects on their economies or on their earnings resulting from a reduction 
in the price of an affected mineral or in the volume exported by 

(a) commodity agreements or arrangements initiated by Authority : 

(b) limits on total production of minerals from nodules based on 
percent of growth of world nickel demand : 

(c) regulation of production of non-nodule minerals from area: 

(d) establishment of system of compensation for adversely affected 
developing countries. 

The Authority is to avoid discrimination in the exercise of its powers and 
functions, including the granting of opportunities for activities in the Area : but 
special consideration for developing countries, as provided for in the Convention, 
shall not Ite regarded as discrimination. 

Activities in the Area are to be carried out on the Authority's behalf (1) by 
the Enterprise, and (2) in association with the xVuthority by states parties or 
state entities. Both are to follow a formal plan of work (see Annex II) approved 



-- Informal Composite Xejrotiatinfr Text. Explanatory Memorandum by the President. 
U.X. Document No. A/CONF.62/WP.10/Add. 1, p. 6. 



30 

liy the council. The plan of work for the second category of applicants will be in 
the form of a contract which may provide for joint arrangements with the 
Enterprise. 

There will be a periodic review of the operation of the regime every 5 years 
and a Review Conference. 20 years from entry into force, to review the portion 
of the treaty on the international Area. 

Basic Conditions of Exploration and Exploitation 

Prospecting does not guarantee access for exploration and exploitation although 
the Authority shall encourage prospecting. 

Applicants must negotiate a contract with the Authority ; after this is com- 
pleted, the contractor must, if requested by the Authority, negotiate an agree- 
ment to make technology available to the Enterprise. 

Authority is to consider applications for contracts on a specific timetable and 
expeditiously. If a contract is refused, Authority must state reasons. 

Contracts may provide for joint ventures between contractor and Authority 
through the Enterprise. 

Financial terms of contract are to meet the following objectives : 
— optimum revenues for Authority ; 

— attract investments and technology into Area activities : 
— insure equality of financial treatment ; 

— provide incentives on uniform and nondiscriminatory ba.sis for contractors 
to undertake joint arrangements with Enterprise and developing countries, 
and to stimulate transfer of technology ; 
— enable Enterprise to engage in mining without delay. 
Contractor is required to draw up programs for training of personnel of the 
Authority and developing nations. 

Authority is to adopt rules, regulations, and procedures following criteria set 
down in Annex II. 

All states parties to the Treaty are members of the International Seabed 
Authority, the organization through which states control activities in the area. 
Tbe principal organs of the Authority are the Assembly. Council, and Secretariat. 
There is also the Enterprise and three Commissions of the Council. The Authority 
operates on a one nation/one vote principle. 



31 



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■3:2;: -s 



» J — « 4* 



«l .^ o - 



■ u >.-■ a 
3 o ^ a « 

CM C -^ 



« O w a 

I " ! is ' 



o __^ »* o — • c 

■f * ■* £ £■ o. " 

■" e -^ m ti u u 

> u o ^ « o 



3 — 9 o 



C J) o c « — 



3 w W 




- fin 



f V O U 3 ' 



^ > 5 2 . 



e • 2 - : 



32 

Development of Congressional Concern 

In retrospect, it would seem rather unlikely that deep seabed 
mining would occupy the interest of Congress to the extent that it has. 
In all probability, it would never have become the subject of proposed 
legislation if it were not for the Malta proposal to the United Nations 
in August 1967 to consider a declaration and treaty that the resources 
of the ocean floor beyond the limits of national jurisdiction be de- 
clared the common heritage of mankind. 

Reaction in Congress was immediate with the perception of immi- 
nent and possibly hasty action by the United Nations General As- 
sembly. The Malta proposal raised the possibility that resources, such 
as those on the Continental Shelf of the United States, which could 
reasonably be developed by the United States, would belong to the 
international community. There appeared to be a general belief and 
confidence that great wealth could soon be obtained from the deep 
seabeds as technology bridged the last remaining gaps. Congressional 
concerns over deep seabed resources became focused when it became 
more widely known that U.S. firms were already engaged in develop- 
ing technology to mine the deep seabed. Several resolutions were 
introduced into Congress in the fall of 1967, some of which expressed 
disapproval of the Malta proposal and some which expressed strong 
approval of the common heritage concept. In the Senate, most resolu- 
tions relating to this issue were referred to the Committee on Foreign 
Relations while in the House hearings were held by the Subcommittee 
on International Organizations and Movements of the Committee on 
Foreign Affairs. 

Those who spoke in favor of the Malta proposal pointed out several 
advantages that could be derived from intei-national control. A U.N. 
regime would regulate the depletion of mineral resources and avoid 
the anarchy of a rush to claiming and exploiting these resources by 
individual nations or companies. 

United Nations' control also could reduce the danger of pollution, 
and a U.N. title to operations in the sea could forestall a possible new 
military race, through a treaty similar to the Antarctic Treaty and 
the Outer Space Treaty. Proponents also argued that one of the most 
challenging reasons for U.N. control and administration of the sea is 
to provide the United Nations with an independent income, and lead 
to a general strengthening and maturity in the United Nations. At 
the same time, there would be provided a long-needed source of funds 
to help the underdeveloped countries of the world. 

Ol)poneiits of U.N. action at this time were mainly concerned that 
the issue be more fully studied, in that seabed resources were too 
l)0()rly known, and that the United States might be denying itself 
valuable assets. Delay was also counseled pending the resolution of 
the entire question of the limits of national jurisdiction. In addition, 
some doubt was expressed that the United Nations could effectively 
administer the vast area of the ocean floor. 

Subsecpiently, on August 3, 1970, the executive branch submitted 
a i)roposMl concerning the seabed to the United Nations which raised 
a series of questions that became the focus of attention by the 91st 
Congress. What were the jurisdictional limits of the Continental 
Shelf? Should the limit be geological or legal? Should it be based on 



33 

considerations of equity, security, or economic a(lvan(aj]:e? IIow mucli 
did the United States stand to lose or gain by tlie creation of an inter- 
national regime? 

Should the United States have a narrow or wide continental shelf? 
For areas beyond the Continental Shelf, what sort of an international 
regime would be best? What principles should be adof)ted? What kind 
of international machinery should be established? How did all these 
aspects affect the economy and national security of the United States? 
Consequently, in the 91st Congress hearings on the development of 
seabed resources mainly examined issues related to the limits of the 
Continental Shelf and jurisdiction of the seabed resources beyond 
the shelf with a view toward the ])olicy which the United States 
should advocate within the United Nations. 

During this period hearings revealed that a special problem was 
created by the U.N. decision to consider the drafting of an interna- 
tional treaty on law of the sea which would be different in concept 
from existing custom and law of the sea. The problem arose from the 
possibility that major investments in deep seabed mining made before 
the conclusion of a Law of the Sea Treaty might be lost without 
compensation by a future treaty which declared these seabed resources 
the common heritage of mankind. Spokesmen for the American Mining 
Congress suggested that investment security until a treaty was 
concluded could best be accomplished through domestic legislation to 
cover the interim period. It was also suggested that such legislation 
might have the effect of forming the basis of common rules among 
nations developing seabed resources during the interim period. Mining 
industry spokesmen were advised that if they wished to provide a 
draft of interim legislation, it would be introduced for circulation and 
discussion. 

The first deep seabed mining bill was introduced in the Senate on 
November 2, 1971. An identical bill was introduced into the House on 
March 20, 1972. These bills contained the legislative recommendations 
which the U.S. mining interests felt would be necessary to promote 
and continue the orderly development of the hard minerals resources 
of the deep seabed pending the adoption of an international regime. 

Several major issues emerged during hearings on these bills and as 
a result of the need for further consideration of these issues, no action 
was taken. Among the questions developed during the hearings were: 

(1) How long will it take to arrive at an internationally accepted 
settlement to the numerous legal and political problems of resource 
jurisdiction and a seabed regime? 

(2) What are the technological considerations and what harm 
will be done to the American mining interests if they were forced 
to wait and thereby lose their present technological lead? 

(3) What correlation is there between the interim legislation 
and stated U.S. ocean policy and resolution adopted by the 
United Nations? 

(4) What will be the economic impact of mining seabed nodules 
on developing countries or on the United States? 

(5) What implications will the interim legislation have on U.S. 
foreign policy, balance of payments, and foreign aid? 

(6) How will the legislation affect the environment or interfere 
with other marine activities? 



34 

During the 93(1 Congress as a result of extensive hearings in both 
the House and Senate, the pro])osed deep seabed mining legislation 
went through a period of evolution and chancre. There changes largely 
reflected substantive points and objections raised by responsible spokes- 
men in the hearings coupled with perceptions developed throuirh 
continued monitoring and analysis of the progress in UNCLOS III. 
During this period the administration developed its position of 
opposition to deep seabed mining legislation stating: 

Regardless of our own views in this country on the intent and effect of the 
legislation, it is likely to be argued by others that the legislation is similar to 
unilateral claims which we have vigorously opposed and that are contrary to our 
national security, navigation and national resource interests and, moreover, that 
it preempts the Law of the Sea Conference on this issuers 

Cognizant of the fact that any number of events could occur that 
would lead the Administration to reason that legislation was necessary, 
the legal adviser to the Department of State concluded his testimony 
stating, ''. . . prudence dictates that we also begin at once to formu- 
late a legislative approach on a contingency basis. It could conceivably 
become clear during the negotiations that we in fact no longer have a 
reasonable basis for expecting a timely and successful Law of the Sea 
Conference." ^* The administration made clear that they would not 
regard the conference as timely and successful unless the schedule 
referred to in the preamble of the Conference resolution were adhered 
to; that is, a treaty including arrangements for provisional application 
of an international seabed regime open for signature in 1975 at the 
latest. Furthermore, the conference could not be regarded as successful 
should it become apparent that other states were not prepared to 
accommodate the basic U.S. interests in a final overall settlement. 

Near the close of the 93d Congress as the first substantive session of 
the Law of the Sea Conference was drawing to a close in Caracas, the 
Senate Interior Committee reported the Deep Seabed Hard Minerals 
Act in a newly amended form. By unanimous consent, the bill was 
removed from the calender and referred to the Committee on Foreign 
Relations from which it did not emerge for the remainder of the 93d 
Congress. 

As it became evident that no further action on seabed mining legis- 
lation would be forthcoming in the 93d Congress, Deepsea Ventures, 
Inc., filed a notice of discovery and claim of mining rights to site in 
the Pacific Ocean. This notice was filed with the Secretary of State in 
a manner suggested in congressional hearings nearly 2 years earlier as 
being in accordance with existing international law. Although this 
claim has received no official recognition, the U.S. Department of 
State has consistently maintained that minnig of the seabed beyond 
the limits of national jurisdiction may proceed as a freedom of the 
high seas under existing international law, providing it did not inter- 
fere with the exercise of the rights of others. 

AlthouLi:!! (leof) seabed mining bills were introduced into the House 
and Senate early in the 94th Congress, su])porters of the bills did not 
[)ush for action pending carc^ful analysis of the progress of the Law of 
the Sea (LOS) ( 'onference in Geneva and during the following inter- 
sessional period. Hearings were held in which members of the U.S. 



= ' U.S. CoiiKn'ss. Uoiisp. Committee on Mercluint Marine and Fisheries. DfH'p Sealied 
Until .MiniTals. Hearinpr.s itefore tlie Subcommlttep on Oroanofrraphv on H.R 9 flnd H.R. 
77.12. U:>,<\ Conp.. Mar. 1. 2S. L'!). Apr. 'A. ll)7:i. and U.K. 1223.-?, Feb. 26. 27, 2S, 1974. 
Washington. D.C. U.S. Government Friutlnj; OllUe. 1974. p. 19. 

»«Ibld., pp. 20-21. 



35 

Law of the Sea delegation were asked to clarify the status of the treaty 
negotiations and the draft negotiating texts under consideration. 
After weighing the information from these hearings, congressional sup- 
porters of ocean mining legislation decided to wait to see if some of the 
progress and optimism expressed by the LOS negotiators would ma- 
terialize during the spring 1976 session in New York. 

Before the end of the New York session it became apparent to a 
number of Members of Congress that while a LOS treaty would still 
be a desirable international achievement, substantive progress was not 
being made, and there was considerable doubt whether some of the 
provisions sought by the United States could, in fact, be attained. 
Consequently, in April 1976, the Interior Committee reported the 
Deep Seabed Hard Minerals Act recommending passage. Subsequent- 
ly, joint hearings were held by the (Committees on Armed Services, 
Commerce, and Foreign Relations which reported the bill without rec- 
ommendation except in the case of the Foreign Relations Committee 
which reported it unfavorably. In their joint report, all three com- 
mittees made similar statements indicating that they would support 
some form of domestic interim legislation at a later date if UNCLOS 
III fails to resolve the issue. 

Soon after the commencement of the 95th Congress, the issue of 
interim deep seabed mining legislation again arose. However, in con- 
trast to previous years. House Members took new^ initiatives and 
several alternative ocean mining bills were introduced. The first deep 
seabed mining bill introduced into the House in the 95th Congress, 
H.R. 3350, cosponsored by Congressman John M. Murphy and Con- 
gi'essman John B. Breaux, was initially quite similar to the bills in 
the previous Congress. This bill was followed shortly by H.R. 3652, 
introduced by Congressman Donald Fraser. This bill represented a 
significant departure from previous legislative proposals in that it 
covered only prototype operations and consisted primarily of a Fed- 
eral insurance program to compensate losses incurred through physi- 
cal interference or as a result of loss of continuity of operations 
resulting from a significant change in the international status of the 
deep seabed area. No new insurance would be issued after July 1, 
1980, and further legislation would be required to establish a legal 
regime for commercial recovery of deep seabed nodules in the absence 
of a treaty. H.R. 3652 also avoids reference to a specific minesite or 
seabed area, a point generally regarded as sensitive in the international 
view as it creates the impression of a territorial claim to a deep sea- 
bed area. 

A third alternative ocean mining bill was introduced by Congress- 
man Paul N. McCloskey which would establish a system for register- 
ing mining enterprises, provide for measures to insure that there was 
adequate demand in the world metals markets that may be affected, 
and establish a revenue sharing or escrow fund from which the United 
States could contribute to an international regime in the event one 
should become established. 

During the spring of 1977 separate hearings were held on deep sea- 
bed issues by four House committees: Subcommittee on International 
Organizations of the Committee on International Relations, Subcom- 
mittee on Mines and Mining of the Interior Committee, Subcommittee 
on Oceanography of the Committee on Merchant Marine and Fish- 
eries, and Subcommittee on Domestic and International Scientific 



36 

Planning, Analysis, and Cooperation of the Science and Technology 
Committee. These hearings focused on a great many issues including: 
Current status of mining consortia, immediate need for legislation, 
availability of ocean mining insurance in the private sector, future 
resource needs and the feasibility of supply disruptions of the metals 
contained in seabed nodules, need for minesite identification, eco- 
nomics of metals markets, environmental concerns, administrative 
views, U.S. tax provisions for mining consortia, foreign policy 
implications including definition of "common heritage of mankind," 
and seabed mining technology as an instrument of American diplomacy. 

Late in the 1st session of the 95th Congress, three different deep 
seabed mining bills were introduced into the Senate in an attempt to 
find new grounds for accord. The sponsors of these separate bills are 
Senator Metcalf (S. 2053), Senator Weicker (S. 2085), and Senator 
Stevens (S. 2168). eJoint hearings were held by the Committee on 
Energy and Natural Resources, Subcommittee on Public Lands and 
Resources, and the Committee on Commerce, Science, and Transpor- 
tation. As the 1st session of the 95th Congress (h-ew to a close, H.R. 
3350 with amendments had been reported by the House Committee 
on Merchant Marine and Fisheries and the House Interior Committee 
while the Senate Committee on Energy and Natural Resources has 
held markup sessions on S. 2053. Further consideration of inteiim 
deep ocean mining legislation coincidental with analysis of the prog- 
ress of deliberations in the Law of the Sea Conference will continue 
in the second session. 

Increasing congressional interest in the issue of deep seabed re- 
sources recover}' coupled with the change in administration have led 
to a new examination of the U.S. negotiating posture in the Third 
U.N. Law of the Sea Conference. Whether or not deep seabed mining 
develops as a result of interim legislation, a future law of the sea 
treaty, or neither, two programs, the Deep Ocean Mining Environ- 
mental Survey (DOMES) and the seabed resources program of the 
International Decade of Ocean Exploration (IDOE) have been stim- 
ulated and funded largely because of congressional interest in deep 
seabed resources. Much of the initial incentive for developing these 
programs resulted from congressional concerns for the environment 
and international cooperation in scientific research. As a result of these 

Programs far more is known about the environment of the deep sea- 
ed today than was known a few years past. It is hoped this informa- 
tion will be of value and an aid to mankind in the future development 
of his heritage. 

Seabed Mining Technology and American Diplomacy 

During the years 1950 to 1952, the United States was preeminently 
the hirgest consuming country of raw materials. At that time, England, 
France, Germany, the Soviet Union, and Japan were still in the early 
stages of recovery from the devastation of World War II. Former 
colonies of England, France, Belgiiim, the Netherlands, and the United 
States had rec(»ive(l their independence but had not yet begun their 
upward surge toward industrialization. A part of the U.S. consumption 
oi nuiterials went to refurbish industry abroad; much more went to 
satisfy consumer demands at home. It was of this period that the 
Faley Commission said the United States with 5 i)ercent of the world's 
population consumed 50 percent of the world's raw nuiterials. 



37 

It was at this time also that an assessment of the potential utility 
of the manganese nodules on the ocean floor concluded that, although 
it would be useful to maj) their occurrence, they would probably not 
be mined during the next 25 years. ^^ The report observed that the 
nodules lay in waters deeper than .'i,000 feet and concluded that: 

There are two reasons for failure to exj^loit the rosouicos of the ocean basins 
in the past. They are lack of extensive exploration and the inability of past tech- 
nology to compete economically with the technology appHed to land resources.^' 

Significantly, the Paley report appeared to assume that when the 
seabed was exploited, U.S. technology would lead the way, and there 
would be no diplomatic obstacle in the way of access to the seabed 
nodules. 

During the 1960's, however, the pace of seabed exploration greatly 
accelerated. Knowledge of the extent and composition of the man- 
ganese nodules confirmed their rich mineral content and enormous 
occurrence. 

At the same time, the rate of consumption of materials by the rest 
of the world accelerated much faster than in the United States. By 
the time the National Commission on Materials Policy reported, in 
June 1972, U.S. consumption, while increasing in absolute terms over 
1952, had declined from 50 to less than 30 percent of the world total. 
World demand for materials, in short, was rising — and continued to 
rise — faster than U.S. demand. By 1973, as a conseqence of a variety 
of circumstances occurring together, world demand for many materials 
briefly outstripped supply. By this time, also, the mineral-rich devel- 
oping countries were endeavoring to maximize the return on their 
raw materials by importing technology, managerial expertise, and 
capital to process raw materials into refined forms, shapes, and even 
products. 

As the technological sophistication of developing countries increased, 
their interest in securing raw materials increased as well. Similarly, 
competition among the developed countries for expanded sources of 
raw materials (expecially Germany and Japan) became keener. 

Accordingly, by the time the National Commission on Materials 
policy reported, ^^ it had become apparent that seabed mining tech- 
nology constituted less of a problem in the years ahead than did 
environmental considerations and the diplomatic question of seabed 
jurisdiction. Said the report: ^^ 

Exploration and development of such areas as the seabed suggest pronounced 
qualitative differences in possible environmental effects. Inasmuch as seabed min- 
ing problems are domestic and international in scope and could have worldwide 
effects on the ocean ecosystem, a pooling of international expertise could perhaps 
best furnish strong environmental control and enforcement. A carefully monitored 
pilot mining system of the seabed on a small scale must be evaluated before any 
attempt at large-scale recover}^ is undertaken. 

The report gave priority to an international approach, by recom- 
mending that: 

* * * the United States support and diligently pursue negotiations of an 
international agreement to establish a legal-political regime to govern uses of the 
ocean floor in the international seabed area.^* 



*s "Resources for Freedom. A Report to the President by the President's Materials Policy 
Commission. (Popularly known as the 'Paley' Commission.)" Vol. IV, "The Promise of 
Technology." June 1952, p. 125. 

26 Ibid., pp. 115, 125. 

"" National Commission on Materials Policy, "Materials Needs and the Environment 
Today and Tomorrow ; Final Report," Washington, U.S. Govt. Print. Off., June 197i. 

" Ibid., chap. 6, p. 7. 

» Ibid., chap. 9, p. 11. 

20-211—78 4 



38 

A section of the report explained the rationale for this recommenda- 
tion as follows:^** 

Seabed: A Future Source of Supply 

The international seabed promises to provide supplies of some materials, to 
reduce the materials import bill, and to assure a greater diversity of sources of 
supply. The total quantity of nodules on the seabed is predictably large. As the 
composition of the nodules varies significantly, it would be premature to estimate 
their potential yield. Still, they could be an important source of cobalt, nickel, 
copper, and manganese. 

International law provides insufficient ground rules to govern commercial 
mining in the ocean depths. Potential explorers of the resources are uncertain as 
to their rights and obligations. As a result, investors and operators alike are 
reluctant to commit their money or time. 

Jurisdictional issues for exploring and developing the resources of the deep 
seabed have inspired numerous international discussions and proposals. The 27th 
session of the United Nations General Assembly unanimously adopted a Law of 
the Sea Conference Resolution which established a schedule for the Conference 
and preparatory negotiations. The Conference Resolution, expressed "the expecta- 
tion that the conference may be concluded in 1974 and, if necessary as may be 
decided by the conference v/ith the approval of the General Assembly, at a 
subsequent session or sessions no later than 197.5." 

U.S. interest in reaching multilateral agreements reflects concerns broader than 
just access to the resources of the deep seabed. The United Nations decision to 
proceed with a world conference on the law of the sea, in which seabed resources 
will be a dominant issue, is evidence of the international community's growing 
awareness of its increasing interdependence. By identifying the new sea and 
seabed issues, and recognizing the necessity of dealing with them in concert in 
the future, the U.N. members have committed themselves to estabhsh the forums 
and institutions to make this aspect of interdependence work for the common 
benefit. All stand to gain from success in this endeavor. 

As lon^ as the obstacle of relative cost makes ocean mining: non- 
competitive, the dij)lomatic issue of n^\\t of exploitation is a theoretical 
one. Occurrence of the manganese nodules — at least in areas of largest 
abundance — is in such deep water (4,000 to 5,000 meters), open sea, 
and remoteness from either refining facilities or markets, that severe 
technological challenges confront the would-be developer. 

The problem is rendered the more complex because of the range of 
mineral values contained in the nodules. In general, they contain 
commercially significant values of manganese (24 percent), nickel 
(1 percent), cobalt (0.35 percent), and copper (0.53 percent), plus 
possibly interesting ])ercentages of other '^coj^roduct" minerals in- 
chuHng zirconium, vanadium, molybdenum, and others. (Typcially, 
the nodules contain more than 30 elements, but compositions vary 
from one submarine region to another, and within regions as well.) 
Thus, it would appear that selection of a site for commercial mining 
operation would present a linear ])rograming ])roblem of formichible 
magnitude. Varial)lcs to be c(msi(lered would include: 

— Cost of processing chargeable to each recovered constituent 
(based on the chosen ])r()cess of recovery) ; 

— Prices of each recovered constituent over a period of operation; 

— (Jost of transport from (h-edge to refinery to market; 

— Pohtical access to sources; 

— Weather and cHmate sensitivity of the technology adopted; 

— Rate of develo[)nient of competing sources, on land^ of the 
^,, materials recoverabU' from nodules; 

— Rale of ciumge in demand for each material recoverable from 
nod Idles; 



"" Ibid., clmp. 9. i)p. 10-11. 



39 

— Price stability of the materials in question; 

— Rate of change in technology of recovery, and in technology of 

refining-processing chargeable to each recovered material; 
— Composition variation of region being mined vis-a-vis other 

regions; 
— Composition variation within the region being mined ; 
— Sensitivity of each material in question to substitutionabihty in 

response to price increase; and 

— Price elasticity of demand generalh' for the materials in question. 

In the face of all these variables, it is a])|)arent that entrepreneurs 

considering the ])rospects of seabed ex])loitation would want to see 

the political or diplomatic variables minimized. Thus, they might 

hope for reasonably firm answers to such questions as the following: 

Will all regions where nodules occur be subject to the same 

diplomatic treatment? 

What national or international claims will be exercised for a 
share of the profits, if any? 

What regulation of operations will be imposed, and by whom, 
and involving what costs and penalties? 

What changes in costs, taxes, or regulations affecting ocean 
mining w^ill occur over what period? 

What subsidies and other assistance will be given to operations 
in competing land-based sources of materials recoverable from 
nodules? 
It is evident that the more efficient the recovery of seabed nodules 
and the more economical their processing, the more readily the 
hazards to profitable mining of the ocean floor can be surmounted. 
On the other hand, degree of profitability may operate as an added 
incentive to the developing and undeveloped countries participating 
in the U.N. treaty negotiations on the law of the sea to insist upon 
possibly unrealistic dividends from ocean mining. Whether this con- 
sideration has obstructed negotiations to date is a matter of specu- 
lation. But the fact remains that very modest progress has been 
achieved toward an acceptable Law of the Sea Treaty. 

The issue of sovereignty over seabed minerals was brought into 
the orbit of the United Nations in 1967 when Arvid Pardo, Maltese 
Ambassador to the U.N., offered a proposal that the seabed ' 'beyond 
the limits of present national jurisdiction" be declared ''the Common 
Heritage of Mankind." Then, in 1970, at the 25th session of the 
U.N. General Assembly, a third U.N. Law of the Sea Conference 
was authorized to imi)lement a policy perhaps along lines of the 
Malta proposal. 

In July 1977, after 8 frustrating years of negotiation, the latest 
round of discussions closed in some disorder. At least four motives 
appeared to influence the delegates. 
Thus: 
— countries possessing land based reserves of manganese, nickel, 

cobalt, and copper, want to slow seabed development; 
— poor countries especially landlocked states, want a "piece of 

the action;" 
— mineral-dependent developed countries want diversified sources — 
and these same countries possess the technological potential to 
mine the seabed; and 



40 

• — among the developed countries, the United States may be the^ 
most advanced technological!}' and thus \sould stand to lose 
the most by further delays, permitting others to catch up — 
although this comparative advantage is by no means certain. 
At the Law of the Sea meetings concluded last July, a further 
complication appeared in the linking of technological research and 
development related to nodule harvesting with scientific research 
in the marine environment beyond national sovereign limits. As a 
consequence of this trend, one marine scientist, John A. Knauss, dean 
of the Graduate School of Oceanography', at the University of Rhode 
Island, declared '*We [i.e. American scientists] may be better off trying 
to develop multilateral and bilateral relationships without the pro- 
posed sea law treaty." ^^ Similarly, a report by the National Academy 
of Sciences concluded that the proposed restrictions on research ''will 
cripple future marine scientific research which will be critical to the 
survival of the oceans and mankind." Accordingly, ". . . many ocean- 
ographers feel that they would be better with no treat}' than with the 
present one."^^ As Elliot Richardson, chief negotiator reported to the 
President July 20, that the U.N. negotiations in 1977 had "set back 
prospects for agreement on an international regime for the conduct 
of seabed mining" and suggested the possibility that it had become 
questionable whether a treaty acceptable to all governments might 
"best be achieved through the kind of negotiations which have taken 
place thus far." 

According to a report in Metal Week^^ the treaty text released July 
20, would impose limits on mining unacceptable to the United States. 
These were: seabed mining at the rate of 100 percent of annual ex- 
pansion in world demand for nickel for 7 years, and 60 percent there- 
after. This would allow, the report said, 10 mining sites to operate by 
1987. 

Meanwhile, development programs of the technology to recover 
nodules from the ocean floor and to extract mineral values from them 
have proceeded under the auspices of private industry. Some half- 
dozen consortia have been formed to develop the required technol- 
ogies. Among them are Ocean Mining Associates (led by Deepsea 
Ventures), Ocean Management, Inc., (led by International Nickel Co.), 
consortium led by Kennecott Copper Co., a consortium referred to as 
the "Continuous Line Bucket Group," and perhaps several others. 
Departments of Commerce and Interior have established offices to 
monitor and record developments in nodule mining (in addition to the 
Bureau of Oceans and International Environment and Scientific 
Affairs in the Department of State). According to one estimate, some 
44 different sites have been identified as "sufficient to support a 3- 
million ton per year operation for 25 years" (i.e., 75 million tons of 
nodules recoverable).^* 

»i As quoted by Deborah Shapley, "Ocean Scientists May Wash Hands of Sea Law 
Treaty," .Science, Aug. 12, 1977. p. 645. 

**"Ij;iw of the Sea," News Report. National Academy of Sciences, National Academy of 
Kiigliieerlii},', Institute of Medicine, National Kesearch" Council, August 1977 (XXVII,' S), 
p. -A. 

«3 "U.S. chary of slow progress on seabed treaty ; Congress debating bill to enable mining 
start," July 2r>, 1977. p. 10. 

»* C. Richard Ttnsley, "Nodule Miners Ready for Prototype Testing." "Englnwrlng and 
Mining Journal," January 1977. pp. 80-81, 101. 



41 

Technologies of nodule recovery variously involve dredging, 
pumping of slurry, air lift, and continuous bucket approaches. The 
metallurgical extraction processes under development involve crushing 
the nodules to a powder or fine slurry, and leaching (with or without 
previous chemical treatment to produce soluble leachants) to extract 
the separate minerals from the composite. Direct smelting is imi)rac- 
tical because an alloy of manganese, copper, cobalt, and nickel would 
be useless and hard to separate into its constituents. Jt should be noted 
that a considerable private investment has already been made in the 
development of technologies for both recover}^ and processing of the 
nodules. Further investment and pilot plant testing will involve 
progi'essively larger costs. 

Accordingly, negotiation of the fair disposition of seabed mineral 
wealth among developed and developing countries, and among mari- 
time and landlocked countries, requires resolution not only of the issue 
of competing national rights to the resources — but also of the issue of 
private property rights to the technologies of recovery and extraction 
and of the gra}" area of rights to the ocean floor. 

Historic principles of international law might be interpreted to call 
for determination of ownership by right of first capture. However, 
this principle works on apparent inequity upon poor nations lacking 
the capital resources to exploit the resource, upon nations lagging 
technological]}^, and upon nations without coastline or shipping. In a 
number of instances nations meeting all three criteria rely on mineral 
resources to support their economic development. Their efforts to 
sustain their revenues in the face of new seabed mineral development 
would seem central to the diplomacy of the Law of the Sea. On the 
other hand the property rights in the intellectual property of technol- 
ogy are unlikel}^ to be dismissed as trivial. 



III. METALS FROM DEEP SEABED MINERALS: 
OVERVIEW 

Nickel 

uses axd substitutes 

Nickel is vital to the iron and steel industry and has played a key 
role in the development oi' the aerospace industiy. Without nickel 
the sophisticated machinery and equipment that provides and 
enhances our standard of living would not be possible. Nickel is 
widely used in alloys where its major contribution is to increase 
corrosion resistance and strength over a wide temperature range, 
although it has other useful properties as well. In the United States 
nickel metal and alloys account for about 95 percent of the nickel 
consumed, which can be broken down as follows: stainless steel and 
steel alloys, 44 percent; nonferrous alloys, 85 percent; and electro- 
plating, 16 percent. Other uses are based on nickel's chemical prop- 
erties in applications such as catalysts, batteries, insecticides, iWd^, 
and pigments. The estimated value of primarv nickel consumed in 
1976 was $700 million. 

Major end uses of nickel in 1976 were transportation, 24 percent; 
electrical equipment, 14 percent; chemical industry, 14 percent; 
construction industry, 9 percent; and fabricated metal products, 9 
percent. In the transportation sector, most of the nickel used in 
aircraft is in superalloys that resist stress and corrosion at high 
temperatures. These alloys are used in jet engines, gas turbines, and 
turbo superchargers. Other nickel bearing steel alloy's are used in 
airframes and nickel is contained in electroj)lated aircraft parts. 
Most of the nickel used in motor vehicles is in electroplated trim i)arts. 
Nickel alloys are also used in marine construction to resist saltwater 
corrosion and fouling. Four-fifths of the nickel used in electrical 
equipment is in resistance alloys such as heating elements. The chem- 
ical and petroleum refining industries are dependent on nickel alloys 
in etpiipment and ])arts exj)osed to corrosive substances. IMost of the 
nickel used in building construction is in stainless steel or other alloys 
for decorative, corrosion I'csistance, or structural purj)oses. Fabricated 
metal j)ro(lucts, generally oi' stainless and nlloy steels, range from 
cutlery, handtools, and general hardware to j)late and sheet metal 
boilers, and duct work. 

In essentially all its uses, other materials can be substituted for 
nickel. However, in most cases substitutes would entail increased 
cost reduction in some s])ecific proj)erty or characteristic which 
would, c()nse(pi(*ntly, affect the economics or i)err()i'nuvnce of the j)iod- 
uct. ( \)lumbiuiTi, rnolybdeniuu, chromium, cobalt, and vanadium 
can be sid)stituted for nickel in ceilain alloys, assuming these materials 
are more readily available. Manganese, molybdenum, and copper 

(42) 



43 

can be used in place of nickel in some types of iron castings. Platinum, 
cobalt, and copper can be substituted for nickel as catalysts in certain 
applications. The major application in wbifh substitutes can be found, 
for nickel is in corrosion resistance and hi<^h strength. For examj)le, 
coatings of alumnium, titanium, or ])histic over steel are i)otential 
substitutes in many applications where nickel alloys are used. Piunt, 
enamel, or other materials can be used where nickel-chromium 
plating is used for trim. 

demand: united states and ^vorld 

Apparent domestic nickel consumption in 1976, including secondary 
nickel, was 227,600 short tons.^ Of this amount, the scrap consumed 
totaled 47,000 tons with 60 percent estimated to be prompt industrial 
scrap and 40 percent old scrap. Over the past 25 yeai-s, U.S. demand for 
nickel has increased at an average rate of about 'A percent i)er year, 
although greater increases have occurred over short periods within 
that time span. Projecting to the end of the centuiy domestic nickel 
consumption would be expected to roughly maintain this rate of growth 
reaching 850,000 to 400,000 tons of primary (miine output) nickel in 
the year 2000. Projections by the U.S. Bureau of Mines for U.w^. 
and world nickel demand through the year 2000 are given in table 
III-l. Domestic demand is projected to fall between 420,000 and 
640,000 tons with a probable level of demand of 860,000 tons in 
1985 and 550,000 tons by 2000. Of these amounts, secondary sources 
(recycling) could be expected to provide increasing percentages, 
reaching 100,000 tons in 1985 and 165,000 tons in 2000. Consequently, 
projected needs for primary nickel would be 385,000 tons in the year 
2000. 

TABLE III-l.— SUMMARY OF FORECASTS OF THE UNITED STATES AND REST OF WORLD NICKEL DEMAND, 

1973-2000 





[Thousand tonsj 












1973 


2000 forecast range 


Probj 


ibte 


Probable aver- 
age annual 
growth rate 
1973-2000 
(percent) 




Low 


High 


1985 


2000 


United States: 

Primary 

Secondary.... 


193 

66 


300 
120 


450 
190 


260 
100 


385 
165 


2.6 
3.5 


Total 

Cumulative (primary) 


259 


420 
6,600 


640 
8,300 


360 
2,700 


550 
7,600 . 


2.8 








Rest of world: 

Primary. 

Secondary 


597 
144 


990 

200 


1,450 
260 


810 
160 


1,205 
245 


2.6 
2.0 


Total . 

Cumulative (primary) 


741 


1,190 
21,200 


1,710 
26, 200 


970 
8,500 


1,450 
23,600 . 


2.5 






World: 

Primary 

Secondary 


.-. 790 

210 


1,290 
320 


1,900 
450 


1,010 
260 


1,590 
410 


2.6 
2.5 


Total.... 

Cumulative (primary) 


.- 1,000 


1,600 
27, 800 


2,350 
34, 500 


1,300 
11,200 


2,000 
31,200 . 


2.6 


Source: U.S. Bureau of Mines, 
ington, D.C., 1976. 


Mineral Facts and Problems 


;, 1975ed., 


Bu!L667, U.S 


;. Government Printing Office, Wash- 



1 Unless otherwise indicated, ton refers to short ton, equivalent to 0.907 metric ton. 



44 



TABLE III-2.-PR0JECTI0NS AND FORECASTS FOR U.S. NICKEL DEMAND BY END USE, 1973 AND 2000 

[Thousand tons] 





1973 


2000, contingency forecasts for United States 






Forecast base 


Forecast range 






End use 


Low 


High 


Probable 


Chemicals 

Petroleum 


38.9 
23.3 
26.0 

18.1 
28.5 
7.9 
33.6 
18.1 
18.1 
23.3 
23.2 


120 
72 
40 

51 
35 
10 
101 
22 
28 
29 
29 


87 
53 
35 

45 
28 
8 
60 
20 
33 
25 
25 


120 
73 
50 

65 

47 

15 

110 

25 

40 

60 
35 


110 
70 


Fabricated metal products 

Transportation: 

Aircraft and parts.. 


46 
45 


Motor vehicles and equipment 

Ship and boat building and repairs.. 

Electrical 

Household appliances 


33 

14 

100 

22 


Machinery 


36 


Construction 

Other 


«0 
34 


Total 


259.0 . 




420 


640 


550 









Source: U.S. Bureau of Mines, Mineral Facts and Problems, 1975 ed., Bull. 667, U.S. Government Printing Office, Wash- 
ington, D.C., 1976. 

TABLE 1 11-3— COMPARISON OF DOMESTIC NICKEL PRODUCTION AND DEMAND 1954-74, 1985, AND 2000 

[Thousand tons] 



Year 



U.S. primary 
demand 



Domestic 

primary 

production 



1954.. 
1955.- 
1956.. 
1957.. 
1958.. 
1959.. 
I960.. 
1961.. 
1962.. 
1963.. 
1964.. 
1965.. 
1966.. 
1967.. 
1968.. 
1969.. 
1970.. 
1971.. 
1972.. 
1973.. 
1974 >. 
1985.. 
2000.. 



84.2 


0.8 


87.1 


3.8 


119.3 


6.7 


111.0 


10.0 


59.9 


11.7 


92.3 


11.6 


121.6 


14.3 


134.2 


11.2 


127.9 


11.2 


120.0 


11.4 


132.1 


12.2 


190.4 


13.5 


228.8 


13.2 


182.4 


14.6 


157.9 


15.2 


149.8 


15.8 


143.6 


15.6 


142.1 


15.6 


171.6 


15.7 


192.5 


13.9 


193.6 


14.1 


260.0 


124.1 4 100.0 


385.0 


>32.6 « 270.0 



' Preliminary, not used in forecasts. 
' Probable forecasts from table 11 1-1. 
» 20-yr t'end. 
♦ Estimated. 

Source: U.S. Bureau of Mines, Mineral Facts and Problems, 1975 ed., 
Washington, D.C., 1976. 



Bull. 657, U.S. Government Printing Office, 



45 



TABLE 111-4.— WORLD NICKEL PRODUCTION AND RESERVES 
(Short tons of metall 



Mine production Reserves 



Grade of ore 
Country 1975 1976' Quantity (percent) 

United States 16,987 17,000 200,000 0.8-1.3 

Canada 269,826 250,000 9,600,000 1.5-3 

New Caledonia. 146,767 135,000 15,000,000 1-3 

Other market economy countries 247,2^9 260,000 28,000,000 .2-4.0 

Cuba (estimate) 40,300 40,000 3,400,000 1.4 

Other central economy countries -. 179,200 178,000 4,800,000 .4-4.0 

Worldtotal -.. 900,329 880,000 61,000,000 

» Estimate. 

Source: U.S. Bureau of Mines, Commodity Data Summaries, 1977. 

Projections of domestic nickel demand by major end use through 
the year 2000 are itemized in table III-2. Based on these projections 
by the Bureau of Mines, cumulative demand for primary nickel 
through the year 2000 would total 7.6 million tons. Considering the 
variables associated with forecasting over this long a time period, this 
figure would appear to be a reasonable projection. 

One additional insight can be added. To maintain a constant ratio of 
domestic production to demand would require a cumulative output by 
the year 2000 of 500,000 tons, whereas known U.S. reserves are less 
than 200,000 tons. Consequently, either recovery methods would have 
to be considerably improved to work low-grade ores or large new high- 
grade deposits would have to be discovered in order to maintain a 
constant ratio of domestic production to demand. Improvements in 
mining and extraction technology are assumed in the estimated 
domestic production levels given in table III-3. 

Worldwide nickel consumption has increased at an average rate of 
nearly 6.5 percent over the last 25 years. However, recent trends 
indicate that growth in primary nickel consumption may level out at 
an average annual rate closer to 4 percent through the end of the 
century. This would essentially triple the amount of nickel now 
consumed annually and would result in a cumulative consumption of 
roughly 35 million short tons over the next 23 years. 

supply: domestic, imports, and world production 

The United States satisfies about 8 percent of its nickel require- 
ments from domestic mine production. Mine production of nickel in 
the United States comes from one source at Riddle, Oreg., which in 
1976 yielded 17,000 tons (metal content). Nickel is also produced 
domestically as a byproduct of copper refining and from secondary 
sources. Secondary nickel was recovered from nickel-bearing alloys, 
stainless and alloy steel, and residues at copper smelters and refineries, 
foundries, and steel mills. These secondary sources yielded an esti- 
mated 47,000 tons of nickel in 1976. Preliminary figures for 1976 
indicate that 71 percent of the U.S. nickel consumption was supplied 
by imports. Canada is the major supplier to the United States. Import 
sources during the 1972-75 period were: Canada, 64 percent; Norway, 
8 percent; New Caledonia, 7 percent: Dominican Republic, 6 percent; 
and other 15 percent. Norway's raw material was nickel-copper matte 



46 

from Canada. Nickel is not currently stockpiled by the U.S. Govern- 
ment with the exception of slightly over 40,000 tons held in stock for 
the U.S. mint. A new stockpile goal has been set at 204,335 short tons, 
roughly equal to 1 year's apparent consumption. 

The United States consumes about one-quarter of the world nickel 
production and produces about 2 percent. Through the year 2000, 
domestic production could continue to supply 5 to 10 percent of the 
nickel required if new reserves can be proven. This, as mentioned, may 
require new developments in mining and processing techniques. 

Four-fifths of the world nickel production is concentrated in five 
countries: Cana(hi, U.S.S.R., New Caledonia, Australia, and Cuba. 
World production and reserves are listed in table III-4. World mine 
production of nickel in 1976 is estimated at 880,000 tons. 

U.S. RESERVES AND RESOURCES 

U.S. nickel reserves total less than 200,000 tons (metal content) in 
laterite deposits containing 0.8 to 1.3 percent nickel located near 
Riddle, Oreg. Other nickeliferous laterites are found in California, 
Oregon, and Washington which are as high grade in nickel but are not 
economically mineable under current conditions. Large low-grade 
sulfide deposits in the Duluth gabbro of northeastern Minnesota are 
classified as resources. These deposits are estimated to contain 7 bil- 
lion tons of material averaging 0.2 percent nickel. 

WORLD RESERVES AND RESOURCES 

World nickel reserves (table III-4) are estimated at 61 million 
tons (metal content). Assuming no addition to reserves, this is nearly 
twice the amount of ])rojected nickel consumption through the year 
2000. Using a strict definition of reserves, other analysts list world 
nickel reserves as a little over 45 million short tons.^ However, identi- 
fied reserves of nickel have been increasing at a rate greater than 
production since 1950. Land based reserves can be expected to con- 
tinue to increase during the next 23 years. Although reserves will 
probably increase at a lower rate than in the past, they Tvill likely keep 
pace with mine production. 

Most new additions to reserves will continue to be laterite ores as 
high-grade sulfide deposits are exhausted. 

Copper 

uses and substitutes 

Co[)por is a major material of great commercial importance. Approx- 
imately 98 percent of the copper consumed in the United States is in 

* Dopp seabed mining, op. cit., p. 270. 



47 

the form of refined metal. Because of its hif^h conductivity and other 
properties, copper is primarily used in electrical equi})ment and suj)- 
plies. In 1976, domestic end use of copper (primary and old scraj)) is 
estimated to have been 58 percent electrical, 14 percent construction, 
12 percent industrial machinery, 9 percent transportation, 2 j)er(;ent 
ordnance, and 5 percent miscellaneous. 

Electrical uses of copper include wire, switches, motor>, <renerators, 
controls, and numerous other applications. Because of its corrosion 
resistance copper finds application in the construction industry for 
plumbing, brass and bronze fittings, and other nonelectrical uses. In 
automobiles copper is used in radiators, heaters, bushin<2:s, bearin^js, 
and electrical systems. Railroad locomotives, switching, and signal 
devices use large amounts of copper as well. Apj)lications of copper in 
ordnance include shell casings, projectile fuses, and fire control equip- 
ment. Among the miscellaneous uses of copper are chemicals, pigments, 
clocks, instruments, jewelry, and coinage. 

Copper is v^ulnerable to substitution from many sources. Aluminum 
is the primary substitute in electrical ai)plications and is currently used 
in virtually all high voltage overhead power transmission lines. 
Plastics are replacing copper in plumbing applications and steel can be 
used for shell cases. Technological advances are also providing sub- 
stitutes for copper by causing some uses to become obsolete. For 
example, satellites have made large coaxial cables unnecessary for long 
distance communications and plastics are being developed that can 
carry tiny beams of light that transmit more information than copper 
wires can carry. Microelectronic silicon chips have also eliminated the 
need for much copper wiring in computers and other electronic 
devices. 

demand: united states and ^vorld 

Apparent U.S. consumption of copper in 1976 totaled 2,350,000 
short tons including scrap. About 17 percent of the total demand was 
satisfied by recycled old scrap. Projecting to the end of the century, 
growth in domestic copper demand may be expected to range from 3 to 
5 percent per year with the probable rate near the lower end of the 
range. U.S. Bureau of Mines projections using an overall growth in 
domestic demand of 3.4 percent are given in table III-5. These 
projections indicate a range in U.S. demand for primary copper in the 
year 2000 from a low of 2.9 million tons to a high of 5.3 million tons, 
with a probable demand of 4.2 million tons. In addition, a greater 
increase in the utilization of recycled copper would be expected. 
Bureau of Mines forecasts of demand include analysis of trends in each 
of the major use categories. Forecasts of domestic copper demand by 
end use are listed in table III-6. Based on Bureau of Mines projections 
and recent trends, U.S. cumulative demand for primary copper by the 
year 2000 w^ould likely be in the vicinity of 70 million to 75 million 
tons; less than currently proven domestic reserves. 



48 

TABLE 111-5— SUMMARY OF FORECASTS OF THE UNITED STATES AND REST OF WORLD COPPER DEMAND, 

1973-2000 

[Thousand short tons] 



1973 



2000 forecast range 



Low 



High 



Probable 



1985 



2000 



Probable aver- 
age annual 
growth rate 
1973-2000 
(percent) 



United States: 
Primary... 
Secondary. 



Total 

Cumulalive (primary). 



Rest of world : 
Primary... 
Secondary. 



1,942 
486 



2,900 
1,200 



5,300 
2,200 



2,700 
900 



4,200 
1,800 



2,428 



4,100 
65, 000 



7,500 
92, 000 



3,600 
28, 000 



6,000 
80. 000 



6.058 
2.158 



12,700 
4,200 



21,400 
7,100 



10, 000 
3,000 



18, 000 

6,000 



Total 8,216 16,900 

Cumulative (primary) 246, 000 



28, 500 
337, 000 



13. 000 
97, 000 



24, 000 
301, 000 



World: 

Primary.. - 
Secondary. 



8,000 
2.644 



15, 600 
5,400 



25, 700 
9,300 



12.700 
3,900 



22, 200 
7.800 



Total 10,644 21,000 36,000 16,600 30.000 

Cumulalive (primary) 311,000 429,000 125,000 381,000 



2.9 
5.0 



3.4- 



4.1 
3.9 



4.0 



3.9 
4.1 



3.9 



Source: U.S. Bureau of Mines, Mineral Facts and Problems, 1975 ed., Bull. 667, U.S. Government Printing Office, Wash- 
ington, D.C., 1976. 

TABLE III-6.— PROJECTIONS AND FORECASTS FOR U.S. COPPER DEMAND BY END USE, 1973 AND 2000 

[Thousand short tons[ 





1973 


2000— Contingency forecasts for United State: 






Forecast base 


Forecast 


range 




End use 


Low 


High 


Probable 


Electrical 

Construction 


1,445 

355 

253 

198 

57 

120 


3,600 

800 

400 

230 

70 

300 


3,000 

400 

350 

150 

50 

150 


5,100 
800 
600 
400 
200 

400 


4,300 
600 


Machinery 


400 


Transportation 


250 


Ordnancs 

Other (including jewelry, pigments, and 
coinage) 


150 

300 


Total . .. 


2, 428 , 




4,100 


7,500 


6,000 









Source: U.S. Bureau of Mines. Mineral Facts and Problems, 1975 edition. Bui. 667, U.S. Government Printing Office, 
Washington. D.C., 1976. 

Preliminaiy estimatos of world piimary copper consumption in 
1970 are close to 8 million tons. The annual i2:rowth in world copper 
demand over the past 20 years has averao:ed about 4.5 percent. 
Throut^h the end of the century, world copper demand can be expected 
to continue to increase at a slightly lower annual rate of around 4 
percent. At this rate, the cumulative world demand for primary copper 
would be close to 320 million tons over the next 23 years. 



supply: domestic, imports, and world production 

The United States is the leading? copper producinfr nation in the 
world, account in^r for about 20 ])ercent of the total world copper 
pro(hi(tion. Preliminary figures for 1976 indicate that domestic mine 



49 

output totaled 1.6 million tons — metal content — valued at over $2.25 
billion. Approximately 60 percent of the co])per produced came from 
Arizona with Utah and New Mexico producing 11 percent each. 
Although the United States is by far the world's largest copper pro- 
ducer, it also imports copper. In 1976 about 15 percent of the tl.S. 
copper consumption was supi)lied by imports. Import sources during 
the period 1972-75 were: Canada, 34 percent; Peru, 20 percent; 
Chile, 18 percent; Rejniblic of South Africa, 6 percent; and others, 
22 percent. Although the United States imports 10 to 15 percent of 
its copper requirements, it does so primaril}' for trade, price, and other 
considerations rather than inability to meet its own needs. Present 
trends indicate that the United States will probably continue to 
produce about 90 percent of its cop])er demand and import 10 percent 
through the year 2000— table III-7. The Government stockpile inven- 
tory totals 20,000 tons of copper. On October 1, 1976, the Federal 
Preparedness Agency announced a new stockpile goal of 1,299,000 
tons of refined copper. The previous stockpile goal had been zero. In 
view of the currently depressed domestic co{)per market it is con- 
sidered likely that the Government will soon move to increase the 
stockpile of this commodity. 

World copper production and reserves are summarized in table 
III-8. World mine production in 1976 is estimated at 8.1 million tons. 
Major producing countries after the United States are Chile, U.S.S.R., 
Canada, Zambia, and Zaire. 

TABLE III-7.— COMPARISON OF DOMESTIC COPPER PRODUCTION AND DEMAND 1954-74, AND 
PROJECTED PRODUCTION IN 1985 AND 2000 

(Thousand short tons) 

Domestic 

U.S. primary primary 

Year demand production 

1954 1,055 835 

1955 1,282 999 

1956 1,273 1,104 

1957 1, 167 1,087 

1958 1,016 979 

1959 1,214 825 

1960 1,107 1,080 

1961 1,237 1,165 

1962.... 1,355 1,228 

1963 1,425 1,213 

1964 1,566 1,247 

1965 1,613 1,352 

1966 1,898 1,429 

1967 1,549 954 

1968 1,540 1,205 

1969 1,696 1,545 

1970. 1,572 1,720 

1971 1,627 1,522 

1972.. 1,951 1,665 

1973.... 1,942 1,718 

1974 1 1,953 1,597 

1985. 22,700 32,100 * 2, 500 

2000 24,200 32,700 4 3,800 

'[Not used in forecasts. 

2 Probable forecasts from table 1 1 1-5. 

3 20-yr trend. 
* Estimate. 

Source: U.S. Bureau of Mines, Mineral Facts and Problems, 1975 edition. Bull. 667, U.S. Government Print. Office, 
Washington, D.C., 1976. 



50 



TABLE 111-8— WORLD COPPER PRODUCTION AND RESERVES 
[Thousand short tons of metal) 



Country 



Mine production 



1975 


1976' 


Reserves 


1,413 


1,610 
240 
790 
890 
190 
270 
250 
210 
530 
760 
820 
300 
870 
300 


93 000 


241 


8,400 


798 
913 
190 
197 


34, 400 

93, 000 

9,800 

32, 900 


250 


18, 500 


197 


3,000 


547 


28, 200 


746 
761 
298 
843 
280 


31, 800 

88, 000 

14, 000 

1 40, 000 

'11,000 



United States 

Australia 

Canada 

Chile 

Papua New Guinea. 

Peru 

Philippines 

South Africa...- 

Zaire. 

Zambia 

Other market economy countries 

Poland 

U.S.S.R. 

Other central economy countries. 

World total. 



7,674 



8,130 



506, 000 



> Estimate. 

Source: U.S. Bureau of Mines. Commodity Data Summaries 1977. 



U.S. RESERVES AND RESOURCES 

U.S. cop])cr reserves of 93 million short tons — metal content — 
are nearly 20 percent of the world's total. Aj)j)ro.\imately 90 percent 
of the domestic reserves are located in five states: Arizona, Utah, 
New Me.xico, Montana, and Michi^^an. Areas containing the major 
potential for development of copper resources are also in the South- 
west United States or the copper-nickel hearins: Duluth ii:abbro of 
Minnesota. U.S. copper resources including undiscovered — hypo- 
thetical and speculative — deposits are estimated in excess of 320 
million tons. 

WORLD RESERVES AND RESOURCES 

World coj)per reserves are estimated at 506 million tons (table 
TII-8). This is considerably more than the estimated cumulative 
world demand of 320 million tons through the year 2000. Identified 
copi)er resources occur primarily in western North America, and South 
Arnerica, central Africa, .southeastern and central Europe, and the 
U.S.S.R. Of the land-based world copi)er resources, around 400 million 
tons exist in well to poorly identified subeconomic deposits. Hypo- 
thetical resources, located near known deposits, probably contain 480 
million tons of co])per and an additional speculative 320 million tons of 
c()pj)cr is assigned to areas not yet prospected. 

Over the last 30 years, largely due to technological developments in 
mining and recovery methods, copj)er reserves have increased at a 
greater rate than |)r()duction. This trend, which has led to the mining 
of lower grade dej)osits, will not likely continue since lower grade 
deposits are much more energy intensive to mine than higher grade 
ore. However new additions to reserves are exj)ected to continue to be 
adequate to meet f()reseeal)le demands. 



51 

Co HALT 
USES AND SUIiSTITUTES 

Althou^rh a relatively little-known metal, the use of cohalt has 
grown over the years from a coloring a(hhtive to an essential element 
in many alloys. In this regard, it is especially important in the electri- 
cal and aerospace in(histries. Among the proj)erties cobalt enhances in 
allo3's are heat and corrosion resistance, strength, and abrasion 
resistance. Cobalt also raises the saturation magnetism and Curie 
temperatures in certain alloys making it particuhirly useful in per- 
manent magnets. Major end uses of cobalt in 1976 were: Eh'ctrical, 
33 percent; paints, 18 percent; machine tools, 17 ])ercent; ceramics and 
glass, 15 percent; transportation, aircraft, 12 })ercent; chemicals and 
other uses, 5 ])ercent. In electrical equipment, the major use of cobalt 
is in permanent magnets. Cobalt and cobalt alloys are used in machine 
and cutting tools and as the metal matrix in tungsten carbide and other 
cemented carbide bits used in mining and drilling operations. 

Nickel may be substituted for cobalt in several applications, but 
because the j)roj)ertics cobalt imparts to su])eralloys and permanent 
magnets exceed those of other elements, substitutes are less effective. 
No satisfactory substitutes have been developed for cobalt in carbides 
or in some tool steels, however, research efforts may succeed. Various 
potential substitutes for cobalt include nickel, platinum, and iron in 
magnets; tungsten, ceramics, and nickel in machinery; nickel and 
ceramics in jet engines; nickel in catalysts; and cop})er, chromium, 
and manganese in paints. Over the long term a trend towartl increased 
substitution of other materials for cobalt ma}' be expected. 

demand: united sates and world 

Preliminary figures indicate that apparent domestic cobalt demand 
in 1976 was 8,500 tons. Of this demand, about 3 percent was satisfied 
from recycled scrap. The use of secondary cobalt is expected to increase 
at a rate of about 5 ])ercent annually through 2000 — table 111-9. 
Based on projections of major end use requirements, U.S. demand for 
cobalt is expected to increase at a rate between 2 percent to 4 percent 
annually through the year 2000 with the probable primary demand in 
that year reaching close to 22,000 tons. This would result in a cumula- 
tive domestic demand for primary cobalt in excess of 350,000 tons 
through the end of the century. Projections of cobalt demand by 
major end uses are listed in table III-IO. Renewed production from 
domestic resources could supply a significant fraction of the U.S. 
cobalt demand by the year 2000 if the market conditions again 
became favorable for domestic cobalt production — table III-ll. 

World primary cobalt demand is projected to increase at a slightly 
greater annual rate than domestic consumi)tion, probably averaging 
between 3 to 4 percent through 2000. Cumulative demand for new 
mine output would likeh' total close to 1.4 million short tons over the 
period. 



52 



TABLE 111-9— SUMMARY OF FORECASTS OF U.S. AND REST OF WORLD COBALT DEMAND, 1973-2000 

(Thousand pounds] 





1973 ' 


2000 Forecast range 


Probable 


Probable 

average 

annual 

growth rate 

1973-2000 

(percent) 




Low 


High 


1985 


2C00 


United States: 

Primary. 

Secondary 


21,722 
454 


29, 700 
1,400 


52, 100 
2,000 


27, 100 
800 


43, COO 
1,700 


>3. 1 
5.1 


Total.. 

Cumulative (primary) ' 


22,176 


31,100 
651, 000 


54, 100 
896, 000 


27, 900 
278, 000 


44, 700 
804,000 .. 


3.1 








Rest of world: 

Primary 

Secondary 


37,309 
2,600 


69, 800 
3,200 


113,000 
4,600 


56, 400 
3,200 


94, 500 
4,200 


3.5 
1.8 


Total 

Cumulative (primary) 


39,909 


73, 000 
1, 430, 000 


117,600 
1, 890, 000 


59, 600 
564, 000 


98, 700 
1,680,000 -. 


3.4 




V/orld: 

Primary 


59,031 


99, 500 
4,600 


165, 100 
6,600 


83, 500 

4, COO 


137, 500 
5,9C0 


3.4 


Secondary 


3,054 


2.5 


Total 

Cumulative (primary). 


62,085 


104, 100 
2, 081, 000 


171,700 
2, 786, COO 


87, 500 
842, 000 


143, 400 
2,494,000 .. 


3.3 





I Calculated from the 20-yr primary demand trend value of 18,888 for 1973. 

Source: U.S. Bureau of Mines. Mineral Facts and Problems, 1975 edition. Bull. 667, U.S. Government Printing Office, 
Washington, D.C., 1976. 

TABLE 111-10.— PROJECTIONS AND FORECASTS FOR U.S. COBALT DEMAND BY END USE, 1973 AND 2000 

[Thousand pounds] 



End use 



1973 



2000 Contingency forecasts for United States 



Forecast 
base 



Forecast range 



Low 



High 



Probable 



Metal: 

Transportation 

Aircraft 

Electrical 

Machinery: 

Machine tools-.. 

Construction machinery. 
Other 



Total. 



Nonmetal: 

Paints 

Chemicals 

Ceramics and glass. 



Total 

Grand total. 



4,035 
6,478 

2,459 
2.037 



6,200 
13, 600 

4,700 
3.100 



4,500 
9,300 

2,400 
2.500 



7,700 
15, 000 

5,100 
5,300 



5,800 
14, 400 



4,900 
4,700 



639 


800 


800 


1,000 


1,000 


15,648 ... 




19, 500 


34, 100 


30, 800 








2,654 
1, 640 
2,234 


8,000 
4,900 
2,800 


5,000 
4,900 
1.700 


8,900 
7,800 
3,300 


6,200 
4,900 
2,800 


6,528 ... 




11,600 


20, 000 


13, 900 









22, 176 



31. 100 



54,100 



44, 700 



Source: U.S. Bureau of Mines. Mineral Facts and Problems, 1975 edition, Bull. 667, U.S. Government Printing Office, 
Washington, D.C., 1976. 



53 

TABLE 111-11— COMPARISON OF DOMESTIC COBALT PRODUCTION AND DEMAND 1954-74, 1985, AND 2000 

(Thousand pounds] 

Domestic pri- 

U.S. primary mary produc- 

demand tion 



1954. 
1955. 
1956. 
1957. 
1958. 
1960. 
1961. 
1962. 
1963. 
1964. 
1965. 
1966. 
1967. 
1968. 
1969. 
1970. 
1971. 
1972. 
1973. 
19741 
1985. 
2000- 



7,350 


1,996 


10, 373 


2,609 


10, 580 


3,595 


11,914 


4,144 


7,542 


2,994 


8,930 


2,247 


11,563 


1,045 


13,622 


721 


12, 002 


948 


13,381 


1,084 


14, 297 


1,186 


17, 900 


1,215 


15, 220 


1,168 


14, 441 


1,176 


19, 184 


1,003 


16, 193 


697 


13,418 


fi90 


19, 268 





21,722 





23, 183 





27,100 2 


* 13, 000 


43,000 3 


< 40, 000 



1 Preliminary, not used in forecasts. 

2 Probable forecast from table II 1-9. 
»20-yr trend. 

* Estimated (includes production from both cobalt-bearing manganese nodules and land-based sources). 

Source: U.S. Bureau of Mines. Mineral Facts and Problems, 1975 edition. Bull. 667, U.S. Government Printing Office, 
Washington, D.C, 1976. 

TABLE 111-12.— WORLD COBALT PRODUCTION AND RESERVES 
(In short tons of metal) 



Country 



Mine production 



1975 



19761 



Reserves > 



Grade of ore 
Quantity (percent) 



United States 

Australia 

Botswana 

Canada 

Finland 

Morocco 

New Caledonia 

Philippines 

Zaire 

Zambia 

Central economy countries. 

World total 



2, 700 


3,000 


54, 000 


0. 08-0. 12 


89 


300 


29, 000 


.06 


1,475 


2,000 


33, 000 


. 03- . 1 


1, 386 


1,500 


20, 000 


.2- .7 


2, 162 


2,200 


14,000 


1.2 


2, 100 


2,200 


300, 000 


.1 


130 


300 


210, 000 


.03-. 12 


19, 220 


20, 000 


500, 000 


. 3-2. 


3, 270 


3,300 


125, 000 


.1- .2 


3,750 


3,800 


350, 000 


.01-. 3 


36. 282 


39, 000 


1.600.000 „ 





' Estimate, 

Source: U.S. Bureau of Mines. Commodity Data Summaries, 1977. 



20-211—78- 



64 

supply: domestic, imports, and world production 

U.S. primary cobalt production ceased in 1971. Most secondary 
cobalt is derived from recycled superalloy scrap. In 1976 secondary 
sources supplied an estimated 250 tons or about 3 percent of the 
domestic cobalt demand. Imports provide essentialh^ the entire supply 
of cobalt. During the period 1972-75 import sources were as follows: 
Zaire, 47 percent; Belgium-Luxembourg, 28 percent; Finland, 8 per- 
cent ; Norway, 7 percent ; and others, 10 percent. Cobalt from Belgium- 
Luxembourg originates in Zaire. The Government stockpile contains 
20,362 short tons of cobalt with a stockpile goal of 42,708 tons set on 
October 1, 1976. 

World mine production of cobalt in 1976 is estimated at 39,000 tons, 
with nearly half from one country, Zaire — table III-12. Other major 
producers include Zambia, Australia, Canada, Morocco, New Caledonia,. 
U.S.S.R., and Finland. Based on consideration of its large reserves,. 
Zaire should be able to remain the leading cobalt producer for the 
foreseeable future. New Caledonia will increase its share of world 
production as its large reserves of lateritic nickel ore are developed. 

U.S. RESERVES AND RESOURCES 

Domestic mine production ceased in 1971 indicating that none of 
the known domestic cobalt deposits are economic to produce, hence, 
by definition, cannot be classed as reserves. Cobalt is produced 
primarily as a byproduct of the production of other metals such as 
nickel, copper, iron, chromium, lead, and zinc. Domestic cobalt 
resources are estimated to total 840,000 tons. Of these deposits, one 
promising area for further development is the Blackbird mining 
district of Idaho because of the relatively high grade ore, 6 percent. 
Cobalt had been mined as the primary metal in this area until 1959. 
Other cobalt resources in the United States, where cobalt is primarily 
associated as a byproduct, are in Minnesota, Missouri, Maine, Alaska^ 
and Pennsylvania. 

WORLD RESERVES AND RESOURCES 

World cobalt reserves total about 1.6 million tons, nearly a third of 
which is located in Zaire. New Caledonia, Zambia, and the Philippines 
also have large reserves. Although most cobalt currently is recovered 
from sulfide ores in Zaire, Zambia, and Canada, much of the world's 
identified cobalt resources are in the form of lateritic nickel ores in 
tr()j)iral regions. Identified cobalt resources total nearly 5 million tons. 
Jn addition, hypothetical and speculative resources — including seabed 
nodules — amount to additional millions of tons. 

Manganese 

uses and substitutes 

More than 90 |)ercent of all manganese consumption is used in the 
slrcl industry, where it is primarily a scavenger in the molten steel, 
cornhining with sulfur and oxygen (which make steel biittle) an(l 
icnioving them as part of the slag. Manganese is also used in steel 
allo3s to increase shock and abrasion resistance and work-hardening 



55 

ability. Manganese is used in the steel industry primarily in the form 
of ferromanganese or silicomanganese. For every ton of steel produced, 
13 to 20 pounds of manganese are consumed. Other uses of manganese 
include alloys with copper or aluminum, use in dry cell batteries, and 
chemical uses. Major end uses include: Tiansportation, 23 percent; 
construction, 22 percent; and machiner}^ 17 percent. 

No satisfactory^ economic substitute has been found for manganese 
in its principal use, h'on and steel production. Some substitution is 
possible in minor uses such as chemicals. 

demand: united states and world 

Manganese consumption is reported in several forms, principally 
manganese ore which typically ranges from 35 to 54 percent man- 
ganese, and ferromanganese which typically ranges from 74 to 95 
percent manganese content. 

Estimated apparent domestic manganese consumption, based on 
average metal contents of the various forms, totaled 1.3 million tons, 
metal content, in 1976. There is essentially no recycling of manganese 
from scrap. Recovery of manganese from slag has been investigated, 
but is generally not economical. Slag does, however, represent a potential 
manganese resource which could be developed if economic recovery 
technology were available. Currently, the United States consumes 
12 percent of the annual world manganese production. 

Projections of United States and world manganese demand pre- 
pared by the Bureau of Mines are given in table III-13. Growth in 
world demand has increased at an annual rate close to 4 percent over 
the last 25 years. This growth rate is expected to slow and average 
about 3 percent through the j^ear 2000. At this rate world demand will 
approximately double b}^ the year 2000. Based on an assessment of 
Bureau of Mines projections, cumulative world manganese demand 
from 1977 through the year 2000 would probably total close to 400 
million tons. During this period U.S. demand is ejxpected to grow at a 
somewhat lower rate closer to two percent. By the year 2000, cumula- 
tive domestic manganese demand will likely total between 40 and 45 
million tons. U.S. demand projections by major end uses are given 
in table III-14. 

TABLE III-IS.-SUMMARY OF FORECASTS OF UNITED STATES AND REST-OF-WORLD MANGANESE DEMAND, 

1973-2000 

[Thousand short tons) 



1973 



2000 Forecast range 



High 



Low 



Probable 



1985 



Probabia 

average 

annual growth 

rate 1973-2000 

2000 (percent) 



United States: 

Total 1,554 1,960 2,700 1,680 

Cumulativel 45,000 54,000 18,000 

Rest of the world: 

Total 9,184 18,500 25,400 13,100 

Cumjiative 352,000 436,000 134,000 

World: 

Total 10,738 20,500 28,100 14,800 

Cumulative 407,000 490,000 152,000 



2.130 11,6 
47,000 

20, 400 S. 
385,000 

22,500 2,8 
432,000 



1 Calculated from the 20-yr primary demand trend value of 1,384 for 1973. 

Source: U.S. Bureau of Mines. Mineral Facts and Problems, 1975 edition. Bull. 667, U.S. Government Printing Office. 

Washington, D.C., 1976. 



56 



TABLE III-14.-PR0JECTI0NS AND FORECASTS FOR U.S. MANGANESE DEMAND BY END USE, 1973 AND 2000 

(Thousand short tons] 



End use 



2000, contingency forecasts for United States 



Forecast 
1973 base 



Forecast range 



Low 



High 



Probable 



Construction 325 

Transportation 340 

Machinery 229 

Cans and containers 72 

Appliances and equipment 68 

Gil and gas industries 63 

Chemicals 54 

Batteries 18 

Other 385 

Total 1, 554 



455 

476 

320 

101 

95 

88 

115 

28 

448 



445 

445 

260 

95 

90 

55 

115 

15 

440 



590 
530 
365 
120 
135 

85 
275 

40 
560 



470 

280 

105 

90 

65 

165 

25 

450 



1,960 



2,700 



2,130 



Source: U.S. Bureau of Mines. Mineral Facts and Problems, 1975 edition, Bull. 667, U.S. Government Printing Office 
Washington, D.C., 1976. 

TABLE 111-15.— COMPARISON OF DOMESTIC MANGANESE PRODUCTION AND DEMAND 
1954-74, 1985, AND 2000 



(Thousand short tons manganese content] 



Year 



U.S. primary 
demand 



Domestic 

primary 

production 



1954.. 
1955.. 
1956.. 
1957.. 
1958.. 
1959.. 
I960.. 
1961.. 
1962.- 
1963.. 
1964.. 
1965.. 
1966.. 
1967.. 
1968.. 
1969.. 
1970.. 
1971.. 
1972.. 
1973.. 
1974 >. 
1985.. 
2000.. 



794 


177 


1,237 


263 


889 


297 


1,267 


257 


953 


196 


1,061 


153 


1,077 


117 


842 


78 


978 


73 


1,096 


94 


1,216 


79 


1,373 


83 


1,353 


88 


1,207 


73 


1,150 


48 


1,317 


93 


1,327 


66 


1,170 


38 


1,366 


29 


1,554 


31 


1,492 


35 


2 1, 680 3 


*30 


2 2,130 s 


*0 



• Preliminary, not used in forecasts. 

» Probable forecasts from table 111-13. 
3 20-yr trend. 

* Estimated. 

Source: U.S. Bureau of Mines. Mineral Facts and Problems, 1975 ed., Bull. 667, U.S. Government Printing Office, Wash- 
ington, D.C., 1976. 



57 

TABLE 111-16.— WORLD MANGANESE PRODUCTION AND RESERVES 
[Thousand short tons gross weight! 

Mine production 
Country 1975 19751 Reserves 

United States 

Australia 1,714 1,800 330,000 

Brazil 1,800 1,800 95,000 

Gabon 2,458 2,500 210,000 

India 1.688 1,700 65,000 

South Africa, Republic of 6,359 6,300 2,200,000 

Other market economy countries 1,818 1,700 30,000 

Central economy countries 11,100 11,300 3,000,000 

World total 26,900 27,100 6,000,000 

1 Estimate. 

Source: U.S. Bureau of Mines. Commodity Data Summaries, 1977. 

supply: domestic, imports, and world production 

Domestic production of manganese ore ceased in 1970 and there is 
essentially no recycling of manganese metal. The few producers of 
manganiferous ores (lower than 35 percent manganese content) are 
usually considered part of the iron ore industry and the total man- 
ganese production is minimal (less than 2 percent of domestic demand). 
Consequently, the United States is for all practical purposes, entirely 
dependent on imports for manganese materials. Domestic primary 
production is compared to domestic demand in table III-15. During 
the 1972-75 period, import sources for manganese ore (typically 35 
to 54 percent manganese) were as follows: Brazil, 36 percent; Gabon, 
31 percent; Australia, 10 percent; Republic of South Africa, 9 percent; 
and others, 14 percent. During the same period, imports of ferro- 
manganese (typically 74 to 95 percent manganese) were: France, 38 
percent; Republic of South Africa, 35 percent; Japan, 10 percent; and 
others 17 percent. Ferromanganese from France originates as ore in 
Gabon and South Africa. The Government stockpile contains 2,294,000 
short tons of metallurgical manganese ore and 600,000 tons of high 
carbon ferromanganese, among lesser quantities of other manganese 
materials. In addition, the stockpile contains an uncommitted excess 
of 1,338,000 tons of metallurgical ore including nonstockpile grade. 

World mine production of manganese ore and reserves are listed in 
table III-16. Estimated production in 1976 totaled 27 million tons 
with Communist countries, principally the U.S.S.R., accounting for 
42 percent of the total production. Four countries, the Republic of 
South Africa, Gabon, Australia, and Brazil, account for 46 percent of 
the world production and the bulk of the market economy output. 
The United States consumes approximately 15 percent of the world 
manganese production. 



U.S. RESERVES AND RESOURCES 

At the present market conditions, the United States has no reserves 
of manganese ore containing 35 percent or more manganese. Domestic 
manganese resources are estimated to total 74 million tons of con- 
tained manganese in a variety of deposits including: oxides in the 
Artillery Mountains, Ariz.; mangauiferous limestone near Batesville, 
Ark.; manganese silicate veins in the San Juan Mountains, Colo.; 
silicates and carbonates in Aroostook County, Maine; and oxide and 
carbonate deposits in the Cuyuna Kange, Minn. Metallurgical and/or 
mining problems are inherent in recovering manganese from all of 
these low-grade natural resources. However, research has indicated 
that, in most cases, the problems can be overcome at a cost that may 
be more attractive for some deposits than others. The resource figures 
assigned to many of these deposits are in need of reevaluation. 

"WORLD RESERVES AND RESOURCES 

Bureau of Mines estimates of world manganese reserves are on the 
order of 2 bilhon tons (manganese content or approximately 6 bilhon 
tons gross weight). Two countries, the Kepublic of South Africa and 
the U.S.S.R., account for 80 percent of this total. Identified world 
resources other than reserves are estimated to be approximately 1.6 
billion tons (metal content) of which the greater part is in deposits in 
the Republic of South Africa and the U.S.S.R. World resource figures 
can be increased appreciably by inclusion of lower grade materials and 
by drawing more heavily on geological inference. These resource 
figures developed by the Bureau of Mines are considered to have 
reasonable prospects of availability at a cost within the next 25 years, 
but do not include seabed nodules. 

Other analysts, appl^dng more rigorously the definition of reserves, 
derive a lower figure of 678 million metric tons (0.75 bilHon short tons) 
for world manganese reserves (manganese content).^ The major 
difference between these reserve figures and those of the Bureau of 
Mines would be in what is considered a reserve (accessible and eco- 
nomic to mine) versus a resource. 

Summary 

Along with several other metals of critical importance to the United 

States, copper, nickel, manganese, and cobalt are essential to the 
maintenance of the current level of technolog}^ and standard of living. 
Manganese is essential in the basic process of making steel and is also 
used, as is nickel and cobalt, in many specialized alloys. Because of 
its high conductivity, copper is of particular imi)ortance in electrical 
applications. While there is no reasonable substitute for manganese in 
making steel, substitutes exist for the other metals in many of their 
ap})licati()ns. However, the use of substitutes generally entails the 
loss of ediciency or performance quality of the product and/or higher 
cost. 



« U.S. Congress. ITouso. Coniniltteo on Morohnnt ^fnrlne and Fisheries. Subrommlttpp on 
Oc«'iiiu.i;raphy. I Irarlims, Mar. 17. IS; Apr. 19, 20, 27 ; May 11 and 20, 11)77, U.S. Govern- 
lueut rrlatliiK Olllce, 1977, W- 229-273. 



' 59 

Over the past 25 years, U.S. demand for nickel has increased at an 
average rate of 3 percent annually. Projecting to the end of the cen- 
tury, domestic nickel consumption would be expected to roughly 
maintain this rate of growth, reaching 350,000 to 400,000 short tons 
•of primary (mine output) nickel in the year 2000. Recycling will pro- 
vide increasing percentages of secondary nickel. U.S. nickel reserves 
are estimated at 200,000 tons. Cumulative world consumption of 
primary nickel is projected to approach 35 million short tons by the 
year 2000. World reserves are currently estimated to range from a 
conservative 45 million short tons to a higher 60 million tons. 

World copper demand is expected to increase at an average rate of 4 
percent annually through the year 2000, producing a cumulative 
"world demand for primary copper of 320 million tons. World copper 
reserves are estimated at 506 million tons, considerably more than 
the projected cumulative demand through the year 2000. Cumulative 
domestic demand for copper is likely to range from 70 to 75 million 
tons through the end of the century, less than currently proven 
reserves. 

Cobalt is produced as a byproduct from the primary production of 
■copper, nickel, iron, or other metals. Cobalt consumption in the 
United States is expected to reach 22,000 tons annually by the year 
2000 for a cumulative total consumption of 350,000 tons of primary 
•cobalt during that period. At present, the United States has no cobalt 
reserves. Current world reserves are estimated at 1.6 million tons with 
the cumulative world demand through the end of the century reaching 
dose to 1.4 million tons. Exploration activity can serve to increase 
reserves, and at the same time economic conditions can serve to in- 
crease or decrease reserves through higher prices or higher production 
■costs. 

World demand for manganese is expected to increase at 3 percent 
annually averaged over the next 23 years. During this period, cumu- 
lative demand will total close to 400 million tons (manganese content) . 
World reserves are conservatively estimated at nearly double that 
-amount and may be much greater depending on the economic factors 
considered. At present market conditions, the United States has no 
manganese reserves. Currently, the United States consumes 12 percent 
of the annual world manganese production, a percentage that is likely 
to decline as steel production in other countries continues to increase. 
Cumulative domestic demand for manganese through the year 2000 
will likely total between 40 to 45 million tons. 

Nickel is not currently stockpiled by the U.S. Government although 
a new stockpile goal of 204,335 short tons has recently been set. As to 
copper, the Government stockpile contains 20,000 tons with a new 
goal of 1,299,000 tons. Government stocks of cobalt total 20,362 short 
tons with plans to increase this amount to 42,708 tons. Stockpile goals 
for manganese materials are satisfied with an inventory of 2,294,000 
tons of metallurgical ore, 600,000 tons of high carbon ferromanganese, 
and lesser quantities of other manganese materials. In addition, the 
stockpile contains an uncommitted excess of 1,338,000 tons of metal- 
lurgical ore including nonstockpile grade. 



IV. SUPPLY VULNERABILITY 

Feasibility of Cartels and Embargoes 
general considerations 

As the United States exhausts its richest and more readily available 
mineral resources, new sources of supply must be found. Exhaustion 
of these primary deposits has made possible our rapid national growth. 
However, inexpensive raw materials have also led to a somewhat 
wasteful or thi'owaway lifestyle. Traditionally, free market forces 
have directed the development of new mineral resources. Since it 
has been economically more attractive to develop high-grade, readily 
accessible mineral deposits, the United States has become increasingly 
dependent on imported raw materials. From a strictly economic 
viewpoint, development of mineral resources on a global scale makes 
good sense. However, such development has increasingly tended to 
reflect political as well as economic realities. Nationalization and the 
formation of raw material producer cartels are forms of political and 
economic realities affecting overseas minerals development. 

The increasing reliance of U.S. industry upon imported raw materials 
has raised the question of how vulnerable is the Nation to cartels 
formed by exporting nations either to increase raw material prices or to 
influence U.S. foreign policy. The success of the oil-exporting nations 
through the Organization of Petroleum Exporting Countries (OPEC) 
in both raising prices and exerting increased political influence, has 
given rise to the view that other nations may envision similar success 
with other basic raw materials. 

Before considering the specific cases of each of the four metals of 
commercial interest contained in deep seabed nodules, a few general 
comments on the formation of mineral cartels may be helpful. Among 
the conditions usually considered important for effective producer 
power are: 

(1) Producer control over a substantial share of world production 
entering into international trade; 

(2) Financial resources adequate to cover the loss of export earnings 
involved in restricting exports; 

(.'i) Inability of consumers to develop alternative sources of supply 
in short and medium term; 

(4) Relatively little decrease in demand in response to substantially 
higher prices (low j)rice elasticity of demand); 

(5) Absence of consumer stockpiles; 

(G) Limited ])ossibilities for substitution by synthetic or other 
natural nuite rials; and 

(7) Political objectives and economic situations that are similar 
among ])io(lucers, a condition which implies a relatively small number 
of producers. 

(GO) 



61 

Looking at these conditions, one can identify a number of obstacles 
that arise to the formation of commodity cartels. Unlike the OPEC 
countries, the metal-exporting nonindustrialized countries do not have 
a surfeit of funds which can ])ermit them to withhold or rechice su])ply 
for an indefinite period of time. In addition, the mineral exj)orting 
nations are of much more divergent economic, political, historical, 
and cultural backgrounds such that their chances of reaching a common 
agreement to withhold suppl}' or pro(hice an efl'ective cartel are seri- 
ously limited. Furthermore, any attempt to control the effectiveness 
of substitutes by coordinated action of exporters of different mineral 
commodities would only compound the difficulties of unified action. 

On the other hand, commonly shared social or political values may 
not be essential to the formation of a cartel. Some observers have 
maintained that economic incentives are the primary motivation. 
It has also been suggested that producer nations, frustrated in attempt- 
ing to achieve other goals, may resort to extreme or even irrational 
policies in the management of their mineral resources. The effect of 
such action would be heightened if it were to occur during a period 
of growing demand and overall scarcities. 

Others maintain the OPEC example represents a unique case and 
cannot be duplicated by other industrial raw materials. The demand 
for petroleum is, at least in the short term, much less responsive to 
price increases because the industrialized world is heavily dependent 
on petroleum and alternative energy sources are not readily available. 

Looking at cartels other than petroleum one can see from past 
experience that once a cartel is formed, its chance for success is low. 
Most attempts in the past, largely for food products such as cocoa 
and tea, have failed for one reason or another. The success of the 
diamond cartel and the uranium cartel however, have been exceptions. 
Among the usual causes of failure of past cartels have been deteriora- 
tion of the monopoly position as consumers substitute other materials 
or reduce consumption, differences among members as to price 
structure when demand begins to decline (most producer nations are 
poor and need to sell everything they are able to produce, rather than 
hold back production for possible future gain), rivalry among members 
for market shares, and new suppliers entering the market. Conse- 
quently, it is argued that the possibility of formation of materials 
cartels is not only remote, but the possibility of success of such ventures 
if formed, is unlikely. Furthermore, extreme cartel action by develop- 
ing countries that would severely disrupt the economies of industrialized 
countries would also disrupt the economies of the mineral exporters 
as prices for imported manufactured goods would increase and their 
availability decrease. 

Despite the above rationale for discounting the possible formation 
of raw material cartels, deep concern has been expressed that such 
cartels nonetheless may become a future reality. The relative lack of 
success of past efforts at minerals cartels may not necessarily reflect 
the course of future attempts. It has been pointed out that past 
attempts have taken place largely during periods when buyers' 
markets existed for most world commodities, whereas, lately, sellers' 
markets appear to be more common as demand reaches new highs. 
However, in the last half of 1977 there has been a softening in some 
metals markets especially copper. Furthermore, in terms of the high 
concentration of production and exports, a potential for cartels 
exists — in 13 of 18 major nonfuel mineral commodities in world trade, 



62 

the 4 leading exporters control 70 percent or more of the market and 
in 16 out of 18 control 60 percent or more of the market. However, 
in most mineral commodities at least one of the top four exporting^ 
countries is relatively developed and follows a fairly independent 
course in setting price and production levels. On the other hand, 
governments in mineral exporting countries have become more con- 
vinced that they have valuable depletable resources over which they 
must exercise a greater degree of control. Xot only the developing 
mineral exporting countries but some developed mineral exporting 
countries are reviewing the returns they receive for their raw material 
exports. Also of concern, although not a cartel action, is the risk of 
supply interruptions from a major single source due to political 
actions, labor disputes, or internal conflicts — for example, the recent 
conflict in Zaire. 

Observers have noted that the key to future cartel strength may 
depend largely en the actions of four major mineral exporting coun- 
tries: Australia, Brazil, Canada, and the Republic of South Africa.^ 
There are few mineral commodities where one or more of these nations 
is not among the top four exporting countries. In addition, each of 
these countries has a relatively large potential for expanding its pro- 
duction if it desires. The independent marketing actions generally 
pursued by these countries have tended to deter the establishment 
and mitigate the effectiveness of strong cartels. However, Australia, 
Brazil, and Canada have moved toward establishing new resource 
policies. As a result, Australia has opted to join in the formation of 
three producer associations: Bauxite, iron ore, and tungsten, and has 
become a nonvoting associate member in the copper exporters coimcil. 
While Australia's membership in these organizations will likely pro- 
vide a moderating influence, there remains the fact that producer 
organizations are becoming increasingly attractive to mineral export- 
ing countries. In any event, it does not appear likely that xVustralia 
will support any strong cartel action to greatly restrict supplies in 
order to drive prices substantially above market levels. 

Manganese nodules contain a number of metals, but the four metals 
of greatest commercial interest are nickel, copper, cobalt, and manga- 
nese. The potential for and effectiveness of cartels in each of these 
metals commodities w^ill be discussed from the perspective of both the 
market structure of the major suppliers and likely impact on the U.S. 
economy. The feasibility of both short term — less than 3 years — and 
long term — greater than 3 years — supply disruptions will be considered^ 

NICKEL 

World nickel production is dominated by four firms in three coun- 
tries: International Nickel Co. and Falconbridge (Canada), Societe 
le Nickel (New Caledonia), and Western Mining Corp. (Australia). 
It appears that the i)resent prices of the leading nickel prochicers are- 
ah'eady close to profit maximizing levels. A substantially greater 
spread between ])rices and production costs would encourage the 
(leveloj)ment of lower grade, higher cost deposits which are relatively 
abumhmt in the United States and elsewhere. Consequently, signif- 
icantly higher nickel prices relative to production would serve ta 
increase U.S. self-sufliciency in nickel and could possibly cut our 

1 .lohnsdn, Charlos J.. Cartels In Minerals and Metal Supply. Mining Congress Journal,. 
January l'J70, pp. 30-34. 



63 

import dependence to less than half of its current level in 5 to 8 years 
as low-grade domestic deposits were brought on stream. Domestic 
production would have attendant environmental impacts, particularly 
in northern Minnesota and possibly in the Pacific Northwest. Sub- 
stitutes would also erode the nickel market unless these too were 
included in an effectively coordinated multimineral cartel effort. A 
formal cartel of nickel-producing governments acting jointly probably 
would not revise the present company price structure to any consider- 
able extent. Significantly higher price to cost ratios would erode 
demand and aggravate unemployment problems in producer countries. 
Developing countries, primarily Cuba and Indonesia, produce roughly 
13 percent of the world mine production of nickel. The major tl.S. 
supplier is Canada to which we have strong commercial, cultural, 
diplomatic, and strategic ties. A nickel cartel that did not include 
Canada would hardly be considered effective, especially against the 
United States. The Canada oil/natural gas cutbacks, and the Saskat- 
chewan potash situation ^ have somewhat clouded the image of 
Canadian reliability, although during the natural gas shortage this 
past winter Canada resumed delivery to the United States. 

A further concern has been raised by Canadian participation — along 
with Australia, South Africa, France, and other producers — in the 
uranium cartel formed in 1972. Prices for yellowcake, UaOg, have risen 
from $6 a pound in 1972 to about $41 a pound in 1977 as world energy 
prices have become realigned. 

Short-term supply disruptions 

Short-term — less than 3 years — cartel action or embargoes of nickel 
from Canada are highly unlikely. Canadian nickel production is 
roughly 25 times greater than its own domestic needs, and its biggest 
market is in the United States. Consequently, it would not be in 
Canadian interest to disrupt the economy of its major customer. At 
the present time an oversupply condition exists in the nickel market 
and Canadian production is being curtailed as prices drop. Subse- 
quently, in a press conference on October 21, 1977, Prime Minister 
Trudeau mentioned that Canada may consider forming a nickel cartel 
as it did with uranium to obtain fair prices and stable arrangements.^ 
Whether this comment has sincere policy implications or not, in an 
effort to reassure the United States and assuage some of the adverse 
reaction, Inco, Ltd. (International Nickel Co.) immediately issued a 
statement that Inco hasn't had any discussions with anyone regarding 
a cartel and the reaction in world markets to such a concept would be 
harmful to the Canadian nickel industry.* In any event, it is difficult 
to foresee how a nickel cartel could operate as effectively as a uranium 
or oil cartel as the demand for nickel is more price elastic. However, as 
other analysts point out cartels always operate in the elastic region of 
the demand curve since they are monopolies and maintain prices above 
marginal cost.^ Since each member of the cartel also operates where 
price exceeds marginal cost, there is a strong incentive to cheat on 
the cartel by reducing his price and expanding output at the expense 
of other cartel members. There is no international body to which other 



3 In November 1975, the Saskatchewan government announced its Intention to acquire, 
by expropriation if necessary, some or all of the potash mines in the Province. 

3 Toronto Globe and Mail, Oct. 22. 1977. 

* Wall Street Journal, Oct. 24. 1977. 

6 Johnston, James L.. "Seabed Minerals and the U.S. Economy: A Comment." MTS 
Journal, v. 11, No. 1, 1976, pp. 37-38. 



64 

cartel members can go to enforce the cartel agreements. Consequently, 
it is argued that the most effective mechanism for enforcing cartels is 
the cooperation of the consuming countries.^ 

Nickel prices have tripled over the past 10 years as production costs 
have increased under normal market conditions. Prices can be expected 
to continue to rise in the future, probably doubling in about 5 years, 
as the ])resent surplus stocks are worked off and the higher costs of 
developing new mines influence the market. Short-term supph^ disrup- 
tions would be more likely to arise not from marketing actions, but 
from ])roducers internal problems such as labor disputes or environ- 
mental restrictions.'^ Government and industry stockpiles would be 
one means of mitigating disruption of this sort which, in most cases, 
would likely be of realativel}' short (not exceeding a few weeks) 
duration. 

Long-term supply disruptions 

Disruptive long-term (greater than 3 years) cartel action is con- 
sidered remote. Although Canada is reviewing its posture as an ex- 
porter of mineral resources, if it were to enter into a future nickel 
cartel, it would likely be a moderating force. Over the long term, a 
nickel producer organization would likely have to involve major con- 
sumers in order to stabilize large fluctuations in price and demand. If 
significantly higher prices relative to production costs were perceived 
to become a long-term market condition, higher cost resources in the 
United States and elsewhere would become reserves and undergo 
development. The success of any future nickel cartel or producer 
organization would depend to a great extent on Canada's participation 
which would, subsequently, influence the cartel's policies and prices. 
It is unlikely that Canada will significantly change its attitudes and 
economic interrelationships with the United States in the foreseeable 
future. 

Taking a longer view, through the end of the century security of 
suppl,y from Canada is best examined in the light of the adequacy of 
the Canadian reserves and resources for satisf^dng anticipated Cana- 
dian demand. Canada consumes 4 to 5 percent of its nickel production 
and its reserves are more than adequate to meet its own needs and 
maintain its export prochiction levels through the end of the century. 
Approximately half of Canada's nickel ex]H)rts are shii)ped to con- 
sumers in the United States. In view of the great imj)robabiHty that 
(Jana(hi's domestic nickel requirements would reach the point where 
they will absorb the country's substantial production capacity before 
well into the 21st century, responsible ('anadian policy would suggest 
^hat it would not be in Canada's economic interests to attempt any 
flamaging embargo in its major customer, the United States, to which 
the C'anadian econoniv has many links. At the ])resent time Canada 
is dependent on mineral (\\ports (of which nickel is ol' major im])or- 
tance) to maintain its balance of trade. Bairing a massive change in 
Canadian ])()licics, long-term end)arg()es or su])ply disruj)tions for 
reasons other than economic, such as political or social i)ressures, are 
not considered hkely. 

About four-filths of the world nickel outi)ut comes from five coun- 
tries: Canada, U.S.S.R., New Caledonia, Australia, and Cuba. Many 

n.i.i. 

' Kcccnf nir imlliitlon omission stnndards ndopfcd h.v Ontario liavo had nn impact on 
nickel smelting oi)crntinns that Initially has led to rejection ol' some of the ore in order 
to avoid processing ore with higher sulfur content. 



65 

other countries produce nickel but the major j)ro(]ucers shoukl be 
able to maintain their combined market share because ol" their larj^e 
reserves. However, over the long run Canachi's share of the market 
should decline as its level of reserves will not support large-scale 
expansion of nickel mining. At present production rates, Canada 
would exhaust two-thirds of its proven reserves by the year 2000 or 
possibly sooner if reaction to environmental constraints continues to 
lead to high-grading the Sudbury deposits, thus lowering the reserves. 
On the other hand, the large reserves of laterite ores in New Caledonia, 
Dominican Republic, and Cuba suggest that these countries will 
continue to increase their share of the world market suppl3\ Jn a(kli- 
tion Inco has recently inaugurated nickel mining facilities in Guate- 
mala and Indonesia. The U.S.S.R. could become a nickel exporter if 
it can correct problems and improve efficiency of nickel recovery at 
Norilsk in northern Siberia. Worldwide, existing nickel production 
capacity is adequate to meet anticij)ated demand until around 1985. 
The diverse economic and political backgrounds of the major nickel 
producing countries, in addition to the newly developed nickel pro- 
ducing areas, leaves little common ground for sustained cartel actions. 
Furthermore, the developing countries rely heavily on export earnings 
and would likely resist pressure to curtail sales. For example, New 
Caledonia is reported to have derived an average of 98 percent of its 
export revenues from nickel since 1970. The potential for substitu- 
tion, although at an economic cost, also weakens the potential for 
sustained cartel action in the nickel market. Consequently, a nickel 
producer association, if formed, would probably not be effective in 
significantly manipulating market supplies and prices over the long 
term. Canada and New Caledonia will likely remain the major sup- 
pliers of nickel to the United States. 

COPPER 

The United States is essentially self-sufficient in copper and is rel- 
atively protected from possible cartel action of other producing coun- 
tries. Although the United States imports about 15 percent of its 
copper consumption, it is by far the world's largest copper producer. 
However, higher prices on the world market have influenced domestic 
copper prices. The International Council of Copper Exporting Coun- 
tries (CIPEC) was established in 1967 by Chile, Peru, Zambia, and 
the Congo (now Zaire). CIPEC conducts marketing studies, dis- 
seminates reports on world copper developments, and acts in a con- 
sultative manner in helping member countries, individually or col- 
lectiveh', to avoid extreme fluctuations in the price of copper. CIPEC 
attempted its first price control action b}^ reducing export shipmicnts 
of copper in late 1974 by 10 percent and later by 15 percent. However, 
the price which had reached record highs earlier in the year (due to 
factors unrelated to cartel actions) continued to fall as demand 
slackened. In 1975 Indonesia joined CIPEC as a full member, and 
Australia and Papua New Guinea became nonvoting associate mem- 
bers. CIPEC claims to control about 38 percent of world mine pro- 
duction of copper ore and 72 percent of the export trade of mine and 
smelter products. 



66 

Disruptions in supply and market demand have generally had a 
much gi'eater influence on world copper prices than deliberate cartel 
action. The nationalization of mines owned by U.S. firms in Chile in 
1971 disrupted world trade patterns in copper. During the period 
1967-70, 27 percent of U.S. copper imports originated in Chile, 23 
percent in Canada, 21 percent in Peru, 7 percent in the Republic of 
South Africa, and 22 percent in other countries. In 1971 U.S. copper 
imports shifted markedly with 37 percent from Canada, 29 percent 
from Peru, 15 percent from Chile, and 19 percent from all other 
countries. Chilean mine production of copper continued to increase 
during the 1970-72 period although it sta^^ed far below the capacity 
that was available as a result of past expansion programs. 

Short-term supply disruptions 

Short-term supply disruptions in the copper market may arise 
from isolated actions in producer countries, such as political instabil- 
ities, strikes, or investment or production problems, but cartel-induced 
supply or price disruptions are unlikely. The United States imports 
about 15 percent of its copper needs but this deficit could largely be 
made up from substitutes or elimination of less essential uses of 
copper. Higher copper prices would also lead to increased substitution, 
greater recycling, and reduced demand for primary copper. While 
short-term supply disruptions would have some impact on the United 
States, the overall economic impact would be minimal. Greater 
short-term impacts on the domestic copper market would be more 
likely to occur from essentially domestic problems such as strikes, 
overexpansion, financing difficulties, and regulatory constraints such 
as smelter emission controls. 

At the present time world copper prices have dropped to the point 
where they are below the production costs of some U.S. copper 
producers. Weak demand, large inventories and additional production 
capacity now coming on stream are expected to maintain the present 
supply demand situation for a few years keeping copper prices de- 
pressed. In this regard, industry observers have noted that less- 
developed copper exporting countries such as Zaire, Zambia, Peru, 
and Chile are less concerned with profit and loss than with main- 
taining or increasing employment levels and using copper to balance 
im})orts of oil and industrial goods. ^ Consequently, social, political, 
and balance-of-payments considerations currently appear to be of 
greater importance or influence to copper exporters than establishing 
cartel economics. 

Long-term supply disruptions 

Considering the position of the United States as the world's lead- 
ing copper producer with reserves well in excess of anticipated con- 
sumption beyond the year 2000, the likelihood of effective long- 
term cartel action in this market is slim. While the United States 
imports 10 to 15 percent of its copper needs, it does so for trade, price, 
and other considerations that are not a matter of necessity. Further- 
more, the bulk of the world's copper exports come from members of 
CIPEC, a group that has had no success in its price-raising cfl'orts. 
Unilateral attempts to influence the copper market have also failed. 

" "Coppor Industry: A Matter of Survival." Los Augoles Times, part IV, July 17, 
1977, pp. 1. 9. 



67 

In fact, in times of low prices members of CIPEC have increased 
production in order to maintain revenue levels. 

The costs of producing copper are variable depending on the location 
and physical characteristics of the ore deposit. In the long term, 
the low-cost producers in CIPEC, who are also relatively less de- 
pendent on copper exports than the other members, have little in- 
centive for joining a producer market action because market con- 
ditions favor their copper industries relative to competitors. All 
producers will be likely to avoid market action if its projected effect 
would be to reduce long-term world demand for copper. The potential 
for substitutes in the copper market is a real concern to producers. 

COBALT 

Compared to the quantities of other metals consumed in the U.S. 
economy, the demand for cobalt is relatively small. However, cobalt 
is of strategic and commercial importance primarily because of its 
use in heat and corrosion resistant materials, high strength materials, 
and permanent magnets. Since more than half of the world mine 
production of cobalt comes from Zaire, a potential for monopoly 
price control exists. In 1974, 83 percent of U.S. cobalt imports orig- 
inated in Zaire. During 1976 this percentage declined due to trans- 
portation problems in southern Africa. 

Zaire produces cobalt as a byproduct of copper production (cur- 
rentty, most cobalt is produced as a byproduct of mining sulfide ores 
of copper or nickel). Since cobalt production is tied to the world 
copper and nickel markets, increases in demand for the primary 
product might result in an increase in the supply of byproduct cobalt 
and thus affect the price. 

Short-term supply disruptions 

In the short term, while Zaire could withhold cobalt from the 
market, it cannot increase production more than the copper market 
allows. Supply restrictions by Zaire are easily possible and could be 
effective for a few years. Recent transport problems with the Benguela 
railroad (the traditional route of Zaire's cobaltexport shipments) caused 
world cobalt shortages in the spring of 1976, demonstrating the short- 
term impact Zaire might have if it restricted supplies. During this 
period the percentage of U.S. cobalt imports from Finland, Norway, 
and Canada increased. Zambia also supplied significant quantities for 
the first time in several years. Stockpiles can be used to help mitigate 
short-term supply restrictions. The current U.S. stockpile is roughly 
twice as large as the apparent consumption for 1976, and is planned 
to be increased to equal 4 years consumption. 

Long-term supply disruptions 

In the long run, supply restrictions from Zaire probably would not 
be effective as substitution for cobalt would increase. Although gen- 
erally with some loss of effectiveness, substitutes are available for 
most applications of cobalt. In the opinion of some experts, the role 
of substitutes appears likel}^ to grow faster than new uses for cobalt. 
Furthermore, Zaire faces heavy debt and internal financing problems 
and, consequent!}', relies to a great extent on expanded export earnings 
from cobalt and other metals. Cobalt accounts for about 7 percent of 
Zaire's export revenues. 



68 

Sulfide ores of copper, nickel, iron, lead, zinc, etc., containing 
recoverable cobalt, are abundant throughout the world. Cobalt is 
also recovered as a byproduct from laterite ores which represent the 
bulk of the world's cobalt resources. Increased production of cobalt 
from these sources would take several years to develop but would 
eventually erode the supply position of Zaire or other likeh^ cartel 
groups. The current development of the world's cobalt resources is 
primarily a matter of economics and technologA^ and not a question 
of geologic availability. \Yhile high-grade deposits are concentrated 
in relatively few areas, lower grade deposits are common, and some 
are already being developed for other minerals. 

Although U.S. cobalt resources are very low grade and not economic 
to mine (domestic cobalt mining ceased in 1971), they could con- 
ceivably be worked in a severe emergency when environmental and 
economic costs are less important. In addition, the United States 
could increase the recycling of cobalt if faced with supply shortages 
from traditional sources. For example, roughly half of the cobalt used 
in airplane engines and parts could be recovered. However, recovery 
and production of cobalt from such secondary sources would be 
costlier. 

MANGANESE 

The United States is wholly dependent on imports for its source 
of manganese, essential for making steel. With no domestic reserves 
and no substitutes, the United States is vulnerable to cartel action. 
The bulk of the Nation's ore requirements are imported from Brazil, 
Gabon, and Australia; alloy and ore from the Republic of South 
Africa; and alloy from France, which receives its ore largely from 
Africa and Brazil. The diverse interests of this group and past relia- 
biUty of supply suggest that effective cartel action may not be likely. 
On the other hand, Brazil has recently expressed a desire to limit 
manganese exports in order to conserve high-grade reserves for 
BraziUan industry. Restriction of supply to increase manganese prices 
would probably require joint action by several countries which, as in 
the case of Brazil and Australia, are major iron ore exporters and 
whose continued exports of iron ore would also be threatened by a cut- 
back in manganese exports used in steel production. 

While the likeHhood of cartel action in the manganese market 
appears poor, the fact that no economic substitutes exist for the 
major use of manganese and nearly 40 percent of the Western World's 
])roduction is concentrated in three developing countries, does not 
exclude the possibility of cartolization. However, an efl'ective cartel 
would have to include South Africa whore the bulk of the free w^orld's 
manganese resources are found. Furthermore, Australia is unlikely to 
])articipate in strong cartel actions aU hough it may join a future 
manganese pro(hi(;cr organization, in addition, Austi'niia has a history 
of restricting exj)()rts of minerals thought to be inadequate to meet 
long-term domestic needs." Currently i)roven Australian manganese 
reserves are estimated to last 40 years at ])resent levels of production, 
but its manganese resources are much larger. 

Production of manganese ore in India has been shifting toward 
demeehanization and hibor-intensive i)r()(hi('ti()n. Jn addition develop- 
ment of higher grade reserves is Mpj)nr(Mitly being (h^ferred. In the 



» Prior to the discovery of large new reserves of Iron ore, exports were restricted from 
1938-60. 



69 

event of a major supply disruption from another ])ro(1ucer, these 
trends would inhibit the ability of India to significantly increase 
manganese exports to offset the shortfall. 

Short-term supply disruptions 

Individual producers may take action to drive up prices in the short 
term, as apparently was the case during a period of ])oak (k^mand in 
1973. However, as in the other mineral commodities, hibor problems, 
internal conflicts, or political rather than economic considerations 
may be more likely to create short-term supply disruptions. South 
Africa is vulnerable to socioeconomic unrest and many of the mines 
which are labor intensive are economic only so long as wages remain 
relatively low. Even short-term supply disruptions from South Africa 
could have a significant impact on the world manganese market. Much 
of Gabon's ore output is vulnerable to interruptions in rail transj)orta- 
tion due to dissident activity in adjacent areas. In the event that a 
major source becomes unavailable, other producers could not reach 
significantly higher levels of new output over the short term. This 
would result in an increase in prices and/or a drawdown in am^ avail- 
able stocks. Considering the potential vulnerability of the United 
States to short-term supply restriction, a stockpile of manganese 
materials is important. The current stockpile inventory is about two 
times larger than apparent consumption for 1976. 

Long-term supply disruptions 

In the long term, world reserves and extensive manganese resources 
throughout the world argue against effective future cartel action. 
Less accessible or lower grade deposits will be developed if higher 
prices, relative to costs and other considerations such as political risks, 
make them attractive. Among the current major producers, political 
differences would make a cartel containing Brazil, the Republic of 
South Africa, and Australia somewhat unlikel}^. In the event that one 
of these countries or other producers were not a member of the cartel, 
the nonmembers or new producers could, over the long term, increase 
or develop their production and capture a larger share of the market 
during a long period of supply restriction. Supply disruptions would 
likely be overcome in a few years during which time the shortage of 
manganese ore would be severely felt if stockpiles were not adequate. 
A major increase in production from a deposit such as Groote E3dandt, 
Australia, which would have little or no transportation problem, would 
require a leadtime on the order of 4 years. Exports of manganese ore 
from Gabon and South Africa are dependent on long rail transport 
which is currently operating close to full capacity. In the case of 
Gabon, the open pit mining operations could be expanded consider- 
ably, but approximately 5 more years will be needed to complete the 
current increase in rail transportation capacity. Manganese ore from 
South Africa is mainly mined underground and transported long 
distances by rail. In the event of a suppl}^ disruption by another 
major producer, a leadtime of 3 to 4 years would be required for South 
Africa to increase production to compensate for the shortfall. Dis- 
covery and development of a major new source of manganese would 
likely take over 20 years based on past experience. Despite extensive 
exploration efforts no new primary or first-order manganese ore 
discoveries have been made in the market economy countries since 
1960. The leadtime between initial disco ver^^ and significant production 

20-211—78 6 



' 70 

of a new manganese ore deposit has averaged about 13 years. In 
general, small manganese deposits cannot justify the expenditures for 
expensive transport and shipping facilities, and very few manganese 
deposits have sufficient size to currently permit mining at a rate 
which will finance the necessary infrastructure. 

GENERAL MARKET CONSIDERATIONS 

The role of these minerals in the U.S. economy cannot be easily 
judged. Certainly in terms of their dollar value relative to total GNP 
they are inconsequential. However, it must be realized that they enter 
into the productive process at an early stage, so that they contribute 
to a much larger proportion of total output. A true measure of the 
importance of these commodities to the U.S. economy must, therefore, 
take into account the degree to which substitutes exist for these 
minerals, and the degree to which substitutes exist for the products 
produced with these minerals. For example, mineral A may be critical 
to the production of X, but if X can be easil}^ substituted for by a 
product that doesn't depend on A, the importance of A to the longrun 
health of the econom}^ is minimal. 

In any longrun analysis, not only must existing conditions and 
technology be considered, but also those of the future. It ma}' be true 
today that no substitute for a particular mineral or final product 
exists, but in the face of curtailed supplies, high prices or other un- 
foreseen developments, substitutes may develop. As the price for a 
particular mineral rises relative to other costs, the pressure to find 
alternatives increases. One such alternative would be deep seabed 
mining. 

Even though under present laws and conditions deep sea mining is 
too risky for private developers to undertake, sharp price rises could 
change this situation. The market, however, would have to develop in 
such a way that the returns from the deep seabed mining investment 
compensated for the known risks. Obvioush', for those minerals that 
have highly inelastic demand greater risks would be accepted. The 
relevant demand schedules would reflect the availability of substitutes 
for the particular mineral as well as the products ]:)roduced. 

The availability of substitutes may also affect the demand for par- 
ticular minerals without any price changes for that mineral. Relative 
price changes — changes in the price of the substitutes — could occur 
either through technological development or government actions. For 
example, a current major use of copper is electric transmission wire, 
but alternatives exist that in the near future may lead to a sharp drop 
in the demand for copper regardless of what ha])pens to copper prices. 
It is unlikely, however, that the absolute ])rice of co])per would fall 
significantly in response to such a shift in demand, since there are 
fixed costs that must be met, and the existing suj)ply of copper is 
already greater than demand. If demand were to increase, it is likely 
that at least in the short run the ])ri('e of copper would increase, and 
depending on the longrun estimates of demand for co])per lead to 
increased exploration and j)roduction, as well as increase in the desire 
to find viable substitutes. 

'J'o analyze the longrun demand for any of the minerals discussed 
in this rei)ort, a careful study of the technology required to produce the 
final goods, the demand for the final goods, ami the availability of 



71 

supplies of substitutes for the final goods would be required, as well 
as knowledge of supplies of the particular minerals. It is highly un- 
likely, however, that any of the minerals considered here would have 
significant longrun economic im])acts even if their prices increased 
substantially, since for most goods the longrun demand is most likely 
to be relatively elastic. 

SUMMARY 

In summary, some short term cartel action may be disruptive to the 
United States, particularly in the cobalt market and perhaps to a 
very minor extent in the copper market if the U.S. dependence on 
imported copper continues to increase. Short term producer with- 
holding may also influence the manganese market which is directly 
related to steel production. Nickel supplies appear to be dependable for 
the near future although price increases related to the increasing 
cost of Canadian production appear likely. Over the long term nickel 
laterite deposits from lower cost producing areas will begin to dominate 
the market. Long term cartel action does not appear likely to be 
effective. 

Any supply restriction, whether a few months or a few years, would 
extract an economic penalty on the United States, and the longer the 
supply restriction, the greater the total cost of the disruption. The 
effect of this penalt}^ would be to some extent inflationary^ by increasing 
prices and to some extent recessionary by cutting back production. 
These trends, however minor, would have a ripple effect through the 
economy. In such an event, alternative sources of supply would be 
helpful in maintaining free market conditions and mitigating economic 
dislocations. New alternative sources of the metals contained in 
manganese nodules could help limit price increases which, although 
market induced, have been sustained over the long term. Prices can 
be expected to continue to increase substantially through normal 
market conditions due to increased production costs. Mineral exporting 
countries can also be expected to increase taxes for exported raw 
materials. 

A number of studies have recently examined the economic factors 
that influence the minerals markets and the market power of mineral 
producers and producer organizations. Most of these studies have 
indicated that the likelihood of sustained cartel action is remote. 
Among the considerations, however, that appear to be largely dis- 
counted in economic analvsis of prices, supply, and demand elasticity 
are the constraints or limitations involved in minerals production. 
Not only are long lead times (on the order of 10 to 20 years) involved 
in locating, proving, and developing a new ore body, but there are 
financial constraints in forming the large capital investments that 
must be made. If a major producer or group of suppliers were to 
withhold production in order to drive up prices, large new supplies 
could not readily be brought into production. Lead times would have 
a dampening effect on elasticity. Lead time is important both in terms 
of developing new deposits and in utilizing and developing substitutes. 

Political forces as well as economic factors affect the success of 
cartels or producer organizations. Given that it is virtually impossible 
to predict mth accuracy the future political motivations of the mineral 
producing countries, a degree of uncertainty must attend any con- 



elusions regarding the formation and success of mineral producer 
cartels. Nevertheless several conclusions can be drawn: 

(1) Most mineral (nonenerg}-) and metal cartel-like producer 
organizations do not pose a major long-term economic threat ta 
major importing countries, especially the United States. 

(2) The current international pohtical-economic climate favors 
the formation and strengthening of producer associations. 

(3) Producer associations are becoming more realistic in their 
recognition of the limits of their market power and are aware of 
the need to produce long-term profit maximization. 

(4) A factor operating against profit maximization is that many 
developing countries that are dependent on revenues from mineral 
exports are more concerned with total revenues and maintaining 
emplo3^ment levels over the short term than maximizing unit 
prices. 

(5) The future strength of producer organizations in general 
may depend largely on the actions of four major mineral exporting- 
countries — Australia, Brazil, Canada, and the Republic of South 
Africa. In most mineral commodities at least one of these coun- 
tries is a major exporter and their cumulative potential for future 
development is large. In addition, the Soviet Union has a large 
mineral wealth and relies on mineral exports for revenues needed 
to purchase other commodities. Future Soviet trade policies in. 
the Western market and success in dealing with production con- 
straints will also influence the success of cartel-like producer 
organizations. 

U.S. Stockpile Strategy 

The original concept of the ''National Stock Pile of Strategic and 
Critical Materials" was established in Public Law 79-520, approved 
July 23, 1946. Building upon the experiences of World War II, the 
act authorized the accumulation of stocks of ''certain" materials to 
be designated as "strategic and critical." Definitions of these terms 
have never been precisely established but, generally speaking, "stra- 
tegic" means variously: 

— Related to or required for a strategic military program; 

— Presenting a strategic problem to assure adequate supplies (and 
also presumably a necessary commodity) ; or 

— Simply, any essential important commodity. 

The term "critical" applied to a material signifies that it is essential 
and either in short supply or likely to become short under some 
particular set of conditions. Unfortunately, the term loses its pre- 
cision because some uses of any material are more essential than 
others, and some suj)plies are more available — or less costly to ex- 
j)loit — than others. Hence, the pro|)erty of criticalness tends to be 
(qualitative and a mutter of interj)retation. 

The stockpile begun in 1946 was based upon a concept of military 
requirements for a 5-year war against a major opponent. Initially it 
was assumed that nuclear weapons would be brought under inter- 
national control so that "conventional" (i.e., noimuclear) wars would 
more or less resemble the conflict of 1939-45. However, subsequent 
exi)enences in Korea and Vietnam showed that limited wars for 
limited objectives did'ered in many important respects fioni general 
war. Kate of materials consumption tended to be less in limited war. 



73 

Expenditure of munitions might be grossly ])rofligate, but tended to 
be tactically ineflectual. Access to ovei-seas resources was unimpaired. 

Shortly after the conclusion of the Korean war, President p]isen- 
hower asked his Cabinet for advice on the issue of stockpiling of 
minerals. In response, the report of the President's Cabinet Com- 
mittee on Minerals Policy reported, November 80, 1954, that the 
stockpile should be enlarged to ease wartime shortages, reduce im])ort 
dependence, and eliminate the need for extreme measures of wartime 
conservation. In effect these recommendations also would serve to 
provide a market for the depressed domestic mining industry. 

^yhen President Kennedy came into office in 1961 he reversed this 
policy, and in the subsequent presidencies of Johnson and Nixon a 
major liquidation of stockpiled reserves was carried out. Thus, when 
the brief and acute shortages of materials occurred in 1970, there 
was no firm policy for use of the stockpile to ease them and for some 
materials the pantry had been entirely emptied. Although in June of 
that year the National Commission on Materials Policy made its 
report, it had little to offer in the way of policy recommendations for 
stockpiling. In fact, it was not until the close of 1976, when the 
National Commission on Supplies and Shortages sent its report to 
Congress that the stockpiling issue was raised in modern, economic 
terms. 

CURRENT DEFENSE INTEREST AND STRATEGIC REQUIREMENTS 

Probably the most salient feature about the current situation in 
materials is the rapid increase in demand on the part of developed 
and developing countries except for the United States. United States 
consumption is still the largest of any country's but its rate of increase 
approximates the increase in U.S. population, while for many other 
countries the rate substantially exceeds that of ])opulation growth. 
]Mineral resources ^° continue to be discovered, but the ability of the 
world's mining industry to exploit reserves (and convert resources to 
reserves) at an adequate rate to meet demand in the future is un- 
certain. The objective of many develo])ing countries is to achieve a 
condition of affluence equaling that of the United States. It is highly 
imlikely that the world's reserves are adequate to make this goal 
feasible, even if world prices rise considerably to enable deposits now 
classed as ''resources" to be reclassified as "reserves." 

The relevance of the stockpile issue for the seabed mineral question 
is that all seabed minerals that occur in quantity (manganese, nickel, 
cobalt, and copper) are classified as ''stockpiled materials", that is, 
among the "certain" materials that are "strategic and critical." In 
addition, a long list of other stockpiled materials (barium, bismuth, 
cadmium, lead, molybdenum, strontium, tin, vanadium, and zir- 
conium) are knowm to occur in trace quantities in the nodules and 
future discoveries may show some of them in economic concentrations. 

The contemporary military problem in materials supply does not 
appear acute. The reasoning that led Presidents Kennedy, Johnson, 
and Nixon to reduce the stockpile still applies: small wars do not 
call for large quantities of munitions or materials; large wars would 
be nuclear, hence of such short duration as to make stockpiled re- 

'" It may be helpful at this point to distinguish "resources" from mineral "reserves." 
The latter are deposits containing mineral values that can be profitably mined today ; the 
former are not profitable today but may become so in the future. 



74 

serves unnecessary. However, there were apparently some awkward 
if brief shortages of materials needed for militar}' production in 1973- 
74, and the military services evidently felt this constraint sufficiently 
to reinstate some of the materials conservation measures and orga- 
nizations used during the Korean war. 

A more important military consideration is the ability of the 
United States economy to sustain the costs of military preparedness 
in an age when militar}'- superiority (or even parity) depends upon 
vio^orous activity in research and development of military hardware 
followed by its energetic and costly deployment. Only a nation with 
a sound currenc}^ and a health}^ econom}' can afford this severe drain. 
The availability of raw materials is the essential starting point of 
industrial activity that is required to support the requisite ''healthy 
econom}^" Uncertainty of suppl}' of essential imported materials and 
wide fluctuation in prices of materials generally can result in an 
impairment of the national economy — in terms of inflation, unem])loy- 
ment, and business failures (or at least slowed investment in capital 
maintenance and expansion). 

Accordingly, studies by the Office of Technology Assessment and 
the National Commission on Supplies and Shortages have concluded 
that some form of economic stockpiling is necessary to achieve supply 
stability, deter threats of cartel action to exploit monopoly positions, 
or overcome sudden shortages from other causes. Both reports caution 
that economic stockpihng should be highly selective in both selection 
of materials and determination of quantities. It has also been observed 
that the tendenc}^ of materials prices to fluctuate tends to be mod- 
erated b}^ the existence of substantial reserves coupled with un- 
certainty as to their precise terms of use. 

One unresolved question is whether the stockpile initiated pursuant 
to Public Law 79-520 can properly be used as an economic stockpile — 
to deter cartel action, assure supply stabilit}^, and dampen price 
fluctuations. To some extent, these purposes were actually served by 
the stockpile during the years 1964-73. 

Near the close of the Ford administration, the decision was made to 
enlarge the national stockpile for an expanded concept of utility. Thus, 
on October 1, 1976, the Federal Preparedness Agenc}^ which now has 
jurisdiction over stockpile planning and management, announced the 
results of an extended study of stockpile objectives. According to a 
FPA press release, the new objectives as recommended by the Na- 
tional Security Council and approved by President Ford, would efl'ect 
three changes: 

(1) Planning will be based on the requirements of materials 
during the first 3 years of an emergency of indefinite duration, 
rather than 1 year under previous guidelines. 

(2) The civilian economy would be provided for, after some 
discounting for conservation (previous policy had not separately 
considered civilian needs.) 

(3) Stockpile planning would estimate civilian and military 
needs separately. 

The issue remaining to be considered in 1977 and thereafter was 
whether this policy modification in the management of the national 
stockpile would suffice to meet future national industrial needs or 
whether a soj)arate economic stockpile or international buffer stocks 
should also be established. 



75 



FUTURE NEEDS FOR PEACE AND WAR 



The erratic patterns of materials supply, demand, pricing, and dis- 
covery observed in the past .30 years may foretell simihirly erratic 
behavior in the future. The relationship of seabed nodules — and their 
development — to the future usage and management of the world's 
minerals is the subject of this section. It begins with the observation 
that neither producer nor consumer countries have been able to design 
a logical ancl coherent national materials strategy for the long range 
future. Most actions and programs are tailored to meet short-term 
conditions expediently. Accordingly, uncertain supply, shifts in 
production patterns, wide swings in inventory management, and price 
fluctuations seem likely to persist in the future. These trends suggest 
also that international tensions centering on materials are likely 
to worsen in the years ahead. Actions beneficial to one country are 
likely to do injury in others. The importance of materials as a source 
of international friction — and the potential roles of seabed nodules to 
mitigate or exacerbate this friction — warrants close study today. 

The ideal posture in materials for a pacific world appears to be one 
in which material supply and demand are in stable balance, with no 
effort by any nation to influence policy of another by threats to with- 
hold supplies or purchasing power. Stability of flow could be enhanced 
by creation of national stockpiles, international bufter stocks, and 
international commodity agreements. International support for the 
development of new sources of supply would eliminate the fear of 
sudden shortages or persistent trends toward deficits. 

The four principal metals in seabed nodules (manganese, nickel, 
cobalt, and copper) are all of importance to industry for peace or war. 
Manganese and copper are associated with basic industry and nickel 
and cobalt with specialties like stainless steel and high temperature 
alloys. Thus, a developing country would first expand its consumption 
of manganese (for steelmaking) and copper (for brass mill products and 
communication wire). As a nation's industry became highly developed, 
the rates of increase in steel and copper tend to flatten while require- 
ments for nickel and cobalt begin to increase. 

The present pattern of world supply of the four metals are as follows: 

Manganese: Australia, Brazil, Gabon, India, South Africa, and the 
U.S.S.R. 

Nickel: Canada, New Caledonia, Australia, Cuba, and the U.S.S.R. 

Copper: United States, Chile, U.S.S.R., Canada, Zambia, and Zaire. 

Cobalt: Zaire and Zambia. 

An estimate of the probability of large future discoveries of the four 
metals in land-based reserves is obviously chancy. However, a few 
observations can be oftered. 

MANGANESE 

Manganese occurrences in the United States tend to be small, 
podiform deposits that are quickly exhausted and uneconomical. Man- 
ganese is a low cost, large volume material and characteristically is 
produced in large volume from massive deposits. Although production 
continues to rise, individual sources are diminishing in number. No 
major discoveries have been made in recent years and the steel indus- 
try tends to regard the nodule source as essential for the future. 



70 



However, llic cost per |)oiin(l of iiiMTuj^nnoso makes (liis source rnar- 
^iiial even after llie nodules linve l>eeri raised lo tlie surface'. 

COIM'IlIt 

Oldest of llie melnl-. in wide eoinnierriMl use, copper Inis lon<]^ heen 
( \\i' ohjeet of worldwide explorntion. As Inj^li ^rnde ores have dwindled, 
(lie nidus! rv luis lurried to ores of pioi^ressively lower ^rade. (At the 
hnii of (lie cenliiiv, orr's of f) j)ercent tind jil)ove- were, needed; by 1070, 
coinnicrcinlly worked dej)Osils were yieldinf^ ().(> percent copper.) Many 
count I'ies produce sii^nificant, (pninlities. C\)p|)er is tlu^ most readily 
re<'ycled of the four ruelnis jiiid n lively secondary metal industry 
exists. Technoloi^y hns efud)led conversion of lar<;e resources to re- 
serves, hut MS ore (pndity declines the energy recpiired for extraction 
<'ont imies to increjise posing n serious fiit ure prohlem of vir<i:in supply. 



Uses of nickel were luodcsl before World Win' II hut expanded 
iMpidly therenflcr. Print ipjil uses were in corrosion-resistant stainless 

' .... 1 I - . Hoys, and 

hardware 



er. I riMcipJii uses were ill corrosion-i csisiam ^lalIIH^'^^ 
steels (containin<^ S to 10 |)ercent, nickel) lii<^h t(unper)it ure alloys, and 



various lii^h sli-en^lh alloys for shafts aiul <^eai's. .Military hardwares 
puierates a shar'p incr'eas(» in <lernand for nickel in wartimes: for <j;un 
l)arr'els, armor plate, ship plate, aircraft, enj^ines and h'adinjx edj^es, and 
many iori'osion-r'esistant- applications. Sevens wartime short a|;es of 
nickel inijx'lled str'enuous conservation measures and tended to dis- 
coura<^'e <'ivilian applications. Nevertheless demand has crept upward, 
jind hy the close of t h(* I9()0's nickel was pr'ohahly the most int(Misiv(dy 
soiij^hl of all major- metals." In conse(pierice, new sour*ces wei'e op(M\ed 
up diiniin; the year-s liKif) 7ft and hy mid-l!>77 supply was runninfj: 
well ahead of (hunand. One prohhun in the halancin*^ of nickel su|)|)ly 
with dtunand lay in the char'acter- of the ore. (icnerally speakin*;, 
rii<*kel oi-es ai'e of two foi'ins, suHide and oxide. The sullides can he 
extrach'd hy (lieiiiinl melallur'^^y hy loastinic and snieltin<^. Oxide 
oi'e . riMpiirc li\ (Iinuielallur-<^ical pi-ocedui'es leachinjij of the m(»tal 
froni (he limiy eriisJKMl or*e. Thus the <j:r*eat. lateritic (h^posits of nickel 
o\ide ores rccpiirc a lon^ development time, and ar'e capital-intensive; 
<»U(e ojauKMl, they ai'e costly to maintain in inteiniil t(Mit operation. 
They mlr'oduce an elcMiient of r'i<^i<lity, and ar"e not r-esponsive to shifts 
in the market for* nickel. Tli(» addition of a lar"<^e su|)ply of nickel from 
iKMlules inher-juilly a hi;^li cost and capital-irit«'nsive opiM'ation - 
would woi-seii this r-i'^ndity. This cii-cumsl ance r'aises (pieslioiis as to 
whether nmliilc mimn;^^ .honld he keyed lo mckci as the principal 
product. 

roll \i/i' 

Like nirkcl, cohtill i. pni lirulnrU im|)o!lnnl in I he |)i<)(lucl ion of 
military hardwaie; h'or instance in machine^un hari«d liner's, jet 
<'nLcine parts, nnirine exhaust manifolds, maj^nest ron majj:nets for r'adar 
sets, and as hinder of tiin'^sten carhidt^ in <'u(tin'^ tools and cor(»s of 
armor-pier'ciri'j: antilardv r'ounds. ( 'haracleristically, cohalt has Ixmmi 
ordy one-lifleenth as ahundant in rratui'(> as nickel fr-om lMnd-has(»d 
(h^posi^s. I Iowe\ (M", in some of I he si^ahed noduh^ deposits cohalt. occur's 

" S«M'. for «'\iiiii|i!.', MiiUmIuIm AdvUorv Homi-iI. .\p|'llfat Ioiih of Mikcl MAH L'lS D.'.TmJMT 
ItaiS, r.'iM-liitiMl Miircli tlMlli. 



77 

in suhslaiitially hii^luM- pcrccnlji^cs (him docs nickel. Tims, if tho 
nodules woro to be mined for liicir (•()j)i)er and nickel conlent, the 
yield in cobalt would <i:en(M'a(e a serious sui'plus. 'I'his circnms(anc(* 
has certainly not escaj)ed the notice of policy makers in Zaiic and 
Zand)ia wIum'C (wo-lhirds of the woild's cobalt is now pioduccd. 

SKAMKI) MINi:i{ALS AND STAUlLri'V OK .Ml\i:i{AI. SUPI'LV/dKM A \ I) 

'J'o the (wtent that exploitation of the seabed nodules is foun<I 
technolo<2:ically possible, economically feasible*, and |)oli(ically acce|)l- 
ablc, it seems likely that some sort of stabili/inti; arian.L!:ement will Ix^ 
needed to protect existing sources of cobalt, to maintain an orderly 
market structure for nickel and copper, and to insure that the man- 
ganese in the nodules is not lost because of its low intrinsic value. 

Even th()u<j;h some half-dozen or more majoi' consortia have been 
formed and are in an advanced state of technolofxical readiness to 
exploit the seabed nodules, it is still unccM'tain as to what the |)olicy 
of the United Stat(*s should be toward this isssue. (.\)nsi(le!at ions as (o 
peacetime and wartime needs beai'in<j: on th(5 issue would a])|)ear to 
include at least the following; items; 

— (Quantitatively, sup|)ly of the four materials to UKM't military 
recpiirements in wartime would not, necessitate sealxnl develop- 
ment, as lon<; as tin* sti'ate<^ic and critical maleiial stockpile is 
maintained. 
— Substantial piodiiction of s(*abed nodule materials would disrupt 
])resent markets because* of differences in piopoitional occui'icnce 
of the different constituents. 
— Large investment in capital-intensive sources of minerals (c.ij:., 
seabed mining, copi)er pro|)hyries, nickel laterites, and manganese 
deposits) results in a rigid market structure that cannot tolei-jite* 
stop-and-go operation. 
— World demand for the four matcM'ials for the i-est of the 2()th 
centuiy seems likely to inc:rease; demands foi' manganese and 
copper will grow faster at first, whih; demands for nickel and 
cobalt will glow faster later; balancing supply with demand will 
be a persistently diflicult task and one not i-esponsive to short- 
term market conditions because of the long development h^ad 
times involved. 
— U.S. reserves of copper are extensive and extensively develojxMl, 
but of low grade; U.S. reserves of nickel are srmdl but nickel 
resources are fairly extensive although of low grade; U.S. reserves 
and resources of manganese; and cobalt ai"e negligible. 
— Recycling to a(;}iieve reuse of materials is extensively practiced 
with copper but to little or no degree with manganese, nickel, or 
cobalt except as these a|)pear in high tc^mperatun; alloys and other 
identifiable alloy form; future energy conservation measures are 
likely to include an increase in recycling of all-important metals. 
— One of the most frecpiently cited devices to stabilize; prices and 
supply/demand relationships of industrial materials, is some foi'm 
of stockpiled reserve, either in the form of (Jovernment stock- 
piles, international buffer stocks, or enlaiged industrial inven- 
tories with (jiovernnu^nt suj)|)()rt ; seabed mineral development 
would increase the need for some sort of flexible stabilizing device, 
as well as being benefited by it. 



y. U.S. FOREIGN POLICY INTERESTS AT THE 
UNCLOS III 

Common Heritage of Mankind 

U.S. executive branch policy on deep seabed mining has developed 
within a foreifrn policy setting in response to negotiations at the LOS 
Conference. The guiding theme for the Conference on resource 
exploitation in the deep seabed has been the ''common heritage of 
mankind" concept. Ambassador Pardo used this term when he brought 
the seabeds issue to the attention of the United Nations in August 
1967: 

* * * the time has come to declare the sea-bed and the ocean floor a common 
heritage of mankind. * * * i 

While Pardo did not define the term, he identified certain principles 
and elements which might be viewed as being embodied by the concept 
and he expanded upon these when he initiated discussions on this issue 
in the U.N. General Assembly on November 1, 1967. (See table V-1.) 
While there still is no real definition of the term, the 1970 Declaration 
of Principles Governing the Seabed contains the elements most 
participants at the Conference have recognized as goals for the 
common heritage. The difficulty has arisen over creation of a regime 
which will achieve these goals. ^ This section will examine the evolution 
of the common heritage concept, identify other countries' perceptions 
of the concept, and discuss the U.S. position on the common heritage. 

GENERAL ASSEMBLY INTERPRETATION 

Eesoluiions 

General Assembly recognition of and comment on the common 
heritage of mankind conce])t, as evidenced in its resolutions, culmi- 
nated in its 1970 Declaration of Principles Governing the Sea-Bed 
and the Ocean Floor, and the Subsoil Thereof, Beyond the Limits of 
National Jurisdiction. Prior to the ado})tion of that resolution, the 
Assembly made a number of observations linking the area^ to the 
concept of common heritage. First, between 1967 and 1969, inclusive, 
no General Assembly resolution on the LOS issue used the words 
"common heritage of mankind," although the concept was alluded to, 
]>ut only in the i)reambular ])aragra|)hs of resolutions. The terminology 
used was ''common interest of mankind." 

One of the most significant Assembly resolutions before 1970 both 
on the seabeds issue and the common heritage concept was the 1969 
^'moratorium" jesolution.* Adoption of this resolution represented an 

^ T'liltcd Nations (loonmont A/OOO."). Aug. IS, 19G7, p. 2. 

=• For n discussion of tho uses of tho terms "miinkind" and "common horltaffo" in U.N. 

fractire boforc tlnr 1})«)7 Malta Inltiatlvo, see Gorovp. Stophcn. "The Concept of 'Commoa 
lerlta^e of Mankind': A roUtlcal, Moral or Lejjal Innovation?" San Ulego Law Review, 
V. ft. No. 3, May lft72 : :{90 -40:5. 

'' The sealx'd and ocean tloor heyond the limits of national jurisdiction. 

MIeneral Assembly Hesolutlon 2r)74I) (XXIV), Dec. 15, 19C9 ; vote: G2 in favor, 2S 
fl{,'aln.st, with 2S abstentions. 

(78) 



79 

eilort by some develoi)ing nations to pre>crve tlio area for the benefit 
of mankind as a whole; that is, to protect the common heritao:e of 
mankind. As evidenced by the vote, the resohition was not unani- 
mously accepted by the Assembly. Those who questioned the wisdom 
of adoption of such a resolution commented on — 

(1) The lack of limits between the international zone and the 
area of national jurisdiction; 

(2) The o:uarantees to coastal states under the 1958 Continental 
Shelf Convention; 

(3) The possibility that such a resolution would encourage 
expansive claims of national jurisdiction; and 

(4) The possibilit}' that such a resolution would retard develop- 
ment of seabed exploitation techn()h)gy.^ 

The ideas referred to in the preambular paragraphs of the resolu- 
tion included — 

(a) ])reservation of the area from actions and uses which might 
be detrimental to the common interests of mankind ; •^ and 

(b) exploitation of the resources of the area should be carried 
out for the benefit of mankind as a w^hole, irres])ective of the geo- 
graphical location of States, taking into account the special 
interests and needs of the developing countries.'' 

The ''moratorium" resolution also expressed the view of the Assembly 
that exploration and exploitation of the area should be carried out 
under an international regime, including appropriate international 
machinery. The major element of the ''moratorium" resolution was 
its operative paragraph: 
The General Assembly, 



Declares that, pending the establishment of the aforementioned international 
regime : 

(a) States and persons, physical or juridical, are bound to refrain from all 
activities of exploitation of the resources of the area of the sea-l)ed and ocean 
floor, and the subsoil thereof, beyond the limits of national jurisdiction; 

(b) No claim to any part of that area or its resources shall be recognized. 

The resolution illustrated the impact of Pardo's 1967 views to the As- 
sembly (see table V-1.) ^ 

The goal of 3 years' work was achieved when the Assembly, on 
December 17, 1970, unanimously adopted the Declaration of Prin- 
ciples Governing the Sea-bed and Ocean Floor, and the Subsoil 
Thereof, beyond the Limits of National Jurisdiction.^ The declaration 
has had a significant impact on the development of law of the sea 
treat}^ articles relating to the deep seabed regime (see table V-1). 

° Yearbook of the United Nations, 1969, p. 66. 

8 OriginaJlv in General Assembly Resolution 2340 (XXII). Dec. IS, 1967 ; vote unanimous. 
■ Orifrinally in General Assembly Resolution 2467 A (XXVIII), Dec. 21, 196S ; vote : 
112 in favor, against, with 7 abstentions. 
8 See also post., pp. S.3-S4. 
» General Assembly Resolution 2749 (XXV) Dec. 17, 1970. 



80 



TABLE V-1.— EVOLUTION OF COMMON HERITAGE OF MANKIND CONCEPT FOR THE SEABEDS 



Elements from 
1967 1 



Pardo statements, 



1970 General Assembly Declaration 



1977 Informal 
text 



composite negotiating 



The area under consideration is the 
seabed and the ocean floor under- 
lying the seas beyond the limits of 
present (1967) national jurisdiction, 
and th;s area is the common heritage 
of mankind. 

This area is not subject to national 
appropriation in any manner what- 
soever. 



Claims to sovereignty over the area, as 
presently claimed, should be frozen 
until a clear definition of the conti- 
nental shelf is formulated. 



Exploration of the area should be 
undertaken in a manner consistent 
with the principles and purposes of 
the U.N. Charter. 



1. The seabed and ocean floor, and the 

subsoil thereof, beyond the limits 
of national jurisdiction (herem- 
after referred to as the area), as 
well as the resources of the area, 
are the common heritage of man- 
kind. 

2. The area shall not be subject to 

appropriation by any means by 
States or persons, natural or jurid- 
ical, and no State shall claim or 
exercise sovereignty or sovereign 
rights over any part thereof. 



3. No State or person, natural or jurid- 
ical, shall claim, exercise or ac- 
quire rights with respect to the 
area or its resources incompatible 
with the international regime to 
be established and the principles 
of this Declaration. 

4. All activities regarding the explo- 

ration and exploitation of the re- 
sources of the area and other re- 
lated activities shall be governed 
by the international regime to be 
established. 

5. The area shall be open to use ex- 

clusively for peaceful purposes by 
all States, whether coastal or 
landlocked, without discrimina- 
tion, in accordance with the inter- 
national regime to be established. 

6. States shall act in the area in accord- 

ance with the applicable princi- 
ples and rules of international 
law. 



The area is to be used and exploited 
for the exclusive benefit of mankind 
as a whole, with that part of mankind 
which is most in need of assistance, 
receiving preferential consideration 
for financial benefits from commer- 
cial exploitation. Use of the area, in- 
cluding its economic exploitation, 
shall be undertaken with the aim of 
safeguarding the interests of man- 
kmd. 

The area shall be reserved exclusively 
for peaceful purposes in perpetuity. 

An international agency should be 
created to assume jurisdiction over 
the area and to serve as a trustee 
for all countries. Financial benefits 
from economic activities in the area 
shall be used primarily to promote 
development of poor countries. 



Scientific research in the area, when 
not directly connected with defense, 
shall be freely permissible and its 
results available to all. 



7. The exploration of the area and the 
exploitation of its resources shall 
be carried out for the benefit of 
mankind as a whole, irrespective 
of the geographical location of 
States, whether landlocked or 
coastal, and taking into particular 
consideration the interests and 
needs of developing countries. 



Article 136. The area and its resources 
are the common heritage of mankind. 



Article 137 (1). No State shall claim or 
exercise sovereignty or sovereign 
rights over any part of the area or its 
resources, nor shall any State or per- 
son, natural or juridical, appropriate 
any part thereof. No such claim or 
exercise of sovereign rights, nor such 
appropriation shall be recognized. 

Article 137 (3). No State or person, nat- 
ural or juridical, shall claim, acquire 
or exercise rights with respect to the 
minerals of the area except in accord- 
ance with the provisions of this part 
of the present Convention. Otherwise 
no such claim, acquisition or exercise 
of such rights shall be recognized. 

Article 134 (5). Activities in the area 
shall be governed by the provisions 
of this part of the present Convention . 



Article 141. The area shall be open to 
use exclusively for peaceful purposes 
by all States, whether coastcl or land- 
locked, without discrimination and 
without prejudice to the other provi- 
sions of this part of the present Con- 
vention. 

Article 138. The general conduct of 
States in relation to the area shall be 
in accordance with the provisions of 
this part of the present Convention, 
and other pertinent rules of interna- 
tional law. 

Article 140. Activities in the area shall 
be carried out for the general benefit 
of mankind as a whole, irrespective 
of the geographical location of States, 
whether coastal or landlocked, and 
taking into particular consideration 
the interests and needs of the devel- 
oping countries as specifically pro- 
vided for in this part of the present 
Convention. 



8. The area shall be reserved exclu- 

sively for peaceful purposes. 

9. On the basis of the principles of 

this Declaration, an international 
regime applying to this area and 
its resources and including ap- 
proptiate international machinery 
to give effect to its provisions 
shall be established by an inter- 
national treaty of a universal 
character, generally agreed upon. 
* * ♦ The regime shall * * • 
insure the equitable sharing by 
States in the benefits derived 
therefrom, taking into considera- 
tion the interests and needs of 
thedevelopmgcountries, whether 
landlocked or coastal. 

10. States shall promote international 

cooperation in scientific research 
exclusively 'or peaceful pur- 
poses • • * No such activities 
shall form the legal basis tor any 
claims with respect to any part 
of the area or its resources. 



Article 137(2). All rights in the resources 
of the area are vested in mankind as 
a whole, on whose behalf the Author- 
ity shall act. See also articles 150 
and 151. 



Article 143. Marine scientific research 
in tlie Area shall be earned out ex- 
clusively for peaceful purposes and 
for the benetit of mankind as a whole, 
in accordance with part XII of the 
present Convention. 



81 



TABLE V-l— EVOLUTION OF COMMON HERITAGE OF MANKIND CONCEPT FOR THE SEABEDS— Continued 



Elements from Pardo statements, 
1967 » 



1970 General Assembly Declaration 



1977 informal composite negotiating 
text 



Exploration and exploitation of the area 
should be conducted in a manner not 
causing unnecessary obstruction of 
the high seas or seiious impairment 
of the marine environment. 



See above 



11. With respect to activities in the 
area and acting in conformity 
w/ith the international regime to 
be established, States shall take 
appropriate measures for and 
shall cooperate in the adoption 
and implementation of interna- 
tional rules, standards and pro- 
cedures for, inter alia: 

(a) The prevention of pollu- 

tion and contamina- 
tion, and other hazards 
to the marine environ- 
ment. 

(b) The protection and con- 

servation of the nat- 
ural resources of the 
area and the preven- 
tion of damage to the 
flora and fauna of the 
marine environment. 
12. In their activities in the area * * * 
Stales shall pav due regard to 
the rights and legitimate inter- 
ests of coastal States in the 
region of such activities, as well 
as of all other States, which may 
be affected by such activities. 
14. Every State shall have the respon- 
sibility to ensure that activities 
;n the area * * * shall be carried 
out in conformity with the inter- 
national regime to be estab- 
lished. 



Article 145. With respect to activities in 
the area, necessary measures shall 
be taken in order to insure effective 
protection for the marine environment 
from harmful effects which may arise 
from such activities in accordance 
with part XII of the present Conven- 
tion: 

(a) The prevention of pollution and 

contamination, and other 
hazards to the marine en- 
vironment. 

(b) The protection and conserva- 

tion of the natural resources 
of the area and the preven- 
tion of damage to the flora 
and fauna of the marine 
environment. 



Article 142(1). Activities in the area with 
respect to resource deposits in the 
area * * * shall be conducted with due 
regard to the ri?hts and legitimate 
interests of any coastal State across 
whose jurisdiction such resources lie. 

Article 139. States parties shall have the 
responsibility to insure that activities 
in the area * * * shall be carried out 
in conformity with the provisions of 
this part of the present Convention. 



1 Taken from United Nations documents: A/6695, 18 Aug. 1967, pp. 2-3; and A/C.1/PV.1516, pp. 5-6 [meeting of the 
First Committee, Nov. 1, 1967, 22d session of the General Assembly). 

Statements in the General Assembly 

Comments on the Common Heritage during General Assembly 
consideration of the 1970 Declaration of Princij^les identify some of 
the perceptions held by delegates as they sought to clarify and elab- 
orate what one delegate called ''a new legal concept": ^° 

(1) The concept of common heritage of mankind . . . has . . . given the 
sea-l3ed Committee a good deal of difficulty. One problem is that it does not yield 
precise legal rules, either of property or of jurisdiction, and its legal implications 
cannot be regarded as clear at this stage. ^^ 

(2) That principle endows the international area with a peculiar character, and 
with this declaration the United States is now changing international law. If 
the declaration is adopted, for the first time a region, zone or area of the planet 
will be subject to a regime in which all peoples of the world would be partners 
and whose resources would contribute to the development of all countries. That 
declaration would, if adopted, in the most serious and resounding fashion pro- 
claim the maturity and progress of the international community through the 
interdependence of interests and the rationalization of ties. The fact that 
participation in its benefits would be equitable and that particular account would 
be taken of the interests and needs of the developing countries would constitute 
notable progress and promise concerning international justice in the distribution 
of resources and would establish a valuable precedent for the future t3^pe of 
justice that would, we trust, lead to the solution of the problems of underdevelop- 
ment of a world-wide scale. '^ 



(3) The "common heritage of mankind" concept does not imply that we in- 
herited it from anyone. It does not mean that the sea-bed and the ocean floor 



" Delegate from Ecuador on Dec. 3, 1970. United Nations mimeograph document 
A/C.1/PV.1782, p. 21. 

" Delegate from Australia on Nov. 30. 1970. A/C.1/PV.1777, p. 28. 

" Delegate from El Salvador on Dec. 2, 1970. A/C.l/PV. 1781, pp. 17-20. 



82 

belonged to someone who bequeathed it to the United Nations or to the inter- 
national community. It is simply a convenient phrase meaning that the seabed 
and the ocean floor belong to the international community, ever}' member of 
which is entitled to an equitable share of its benefits. ^^ 

(4) The concept of "the common heritage of mankind" with its three vital 
elements, common wealth, common management and common and just share of 
benefits, constitutes a step further in international relations, as it professes a 
higher level of genuine equality. The acceptance of this concept constitutes not 
onh' a contribution to the progressive development of international law, but also 
has a wider meaning for democratization of international relations as a whole. ^* 

(5) My delegation has always recognized that the concept of a common heritage, 
without having any clear juridical significance, nevertheless represented a whole 
moral and poUtical complex of great value. ^^ 

LEGAL STATUS OF GENERAL ASSEMBLY RESOLUTIONS 

General Comments on Besolutions 

In the absence of a Law of the Sea Convention estabHshing binding 
rights and obUgations implementing the Common Heritage of Man- 
kind, the adoption by the General Assembly of the 1969 "moratorium'* 
resolution and the 1970 Declaration of Principles may become a 
meaningful factor in the development of international LOS standards. 
The role of these resolutions will depend on the legal status, if any, of 
General Assembly resolutions sui generis. 

Strictly speaking, only a limited number of General Assembly reso- 
lutions incur binding obligations. This includes (a) resolutions dealing 
with the expenses of the organization and placing obligations on U.N. 
members ^^ and (b) resolutions relating to the structure and operation 
of the United Nations organization, thereby placing an obligation on 
the United Nations. All other resolutions might be viewed as recom- 
mendatory as they pertain to the obligation placed on member states. 
Many authorities, however, would classify certain Assembly resolu- 
tions as bearing some degree of legal status or effect.^' These might 
include those resolutions which were intended by the Assembl}' to 
formulate legal ])rinciples or to interpret U.N. Charter articles. In 
addition to intent and language in the resolution, other important 
criteria used to measure the legal effect of resolutions include the degree 
of unanimity by which the resolution was adopted, the views of mem- 
ber states toward the resolution, and the subsequent reference and 
recitation of the resolution in international community bodies and by 
nation states. 

For example, the Universal Declaration of Human Rights, adopted 
by a vote of 48 in favor, none against, with 8 abstentions, was in- 
tended by the Assembh' and by the U.N. members as a "common 
standard of achievement for all peo})les and all nations," but not as a 
legally binding document. It was not a treat}^ or agreement. However,, 
there are some authorities who would argue that the Declaration, 
after almost 30 years, has become part of customary intei-national law. 
It has been cited in other U.N. resolutions, in treaties and agreements,, 
in constitutions, and in the opinions an(l decisions of natioTial and 
municipal courts. It has been referred to as the yardstick iigainst 

1' Of'l.-Kntc from Kcnva on Dfc. 2. 1970. A/C.1/PV.17S1. p. :^2. 

'« lu.|ot,':it«' from Viip'.^lavli on Dee. 4. 1970. A/C.1/PV.17S4, p. 2S. 

^•- I>«'I<j.'af<' Iroin Hrlfriimi on Doc. S. 1970. A/C.1/PVM7SS. pp. 24-2.1. 

1" S<'(' article 17 (»f Uio U.N. Cliartor and International Court of .Justice Advisory 
Opinion or July 20. 11M12. "Certain Expenses of the United Nations." 

'• Whlteinan. Marjorle M. Digest of niternatlonal Law, v. lo. Washington, U.S. Govern- 
ment rrlntin;,' Ofllce. 19(is, i)p. r>4G 531. 



83 

which the human riglits actions of nations, both in and out of the 
United Nations, have been measured. ^^ 

1969 ^^ Moratorium'^ Resolution 

What is the legal efTect, if any, of the 1960 ''moratorinin" resolution, 
which was introduced and adopted in an effort to insure that the area 
within the Common Heritage would be maintained until an appropri- 
ate international regime could be fonnulated? According to its spon- 
sors, the resolution was intended to ''reconcile the need for the Sea-Bed 
Committee to have all the time necessary" to draft an international 
regime with the need to insure that the resources of the seabed would 
not be appropriated or exploited. ^^ Both a supporter and an oj)ponent 
of the resolution observed that it would have ''no legally binding 
effect." ^° Finally the delegate from the United Kingdom commented 
specifically on the resolution and its effect: 

We do not believe that the General Assembly can or should by its recommenda- 
tions purport to modify existing international law.* * * To take decisions which 
have limited support does not liave any effect but merely registers dissent and 
disagreement. In our view, moreover, not only is such action inappropriate, but 
it can be damaging. 

It is clear that this draft resolution has very far fi-om general support. Indeed, 
a considerable number will certainly vote against it and a large number may 
abstain. Not only therefore will it achieve nothing positive behind it, necessarily 
because those who cannot support the draft resolution disagree with the concept 
of nonappropriation but because they believe the resolution is the wrong way to 
go about the problem. The draft resolution will not do any service to the cause 
which the sponsors have told us they seek to promote. Rather, it will do a dis-- 
service. ^^ 

The resolution was adopted in the First Committee of the Assembly 
by a vote of 52 in favor, 27 against, with 35 abstentions. It was adopted 
by the Assembly in plenary session by a vote of 62 in favor, 28 against, 
with 28 abstentions. 

To what extent has the "moratorium" resolution been referred to or 
cited over the past 10 years? The concept, as stated in the resolution, 
was not repeated, word-for-word, in the 1970 Declaration of Principles 
(but see paragraphs 2 and 3 in Table V-1). 

However, the implications of the second and third paragraphs of 
the Declaration might be interpreted as having the same effect as the 
^'moratorium" resolution. ^^ Out of the 12 resolutions on the Law of the 
Sea Conference adopted by the General Assembly between 1970 and 
1976, inclusive, only two, in an indirect manner, might be viewed as 
referring to the "moratorium" resolution (see table V-2), The resolu- 
tion has, however, been referred to throughout debates in the Assem- 
bly, the Seabed Committee, and the Conference, primarily by delegates, 
from Third World or Group of 77 nations, the originators of the 
resolution and its chief supporters. In addition, this resolution, along 

18 See Humphrey, John P. The International Bill of Rights : Scope and Implementation. 
William and Mary Law Review, v. 17, No. 3, Sprinjr. 197(5 : 527-541 ; Asamoah. Obed Y. 
The Lef?al Significance of the Declarations of the General Assembly of the United Na- 
tions. The Haciie. Martinus Nijhoff. 1966. pp. 186-191 ; United Nations. I'nited Nations 
Action in the Field of Human Rights. New York, 1974, pp. 8-19. (United Nations [docu- 
ment] ST/HR/2) 

i'-* Statement b.v delegate from Mexico, Nov. 10. 1969. United Nations. General Assembly. 
Official Records. Twenty-fourth Session. First Committee. 16S3d Meeting, pp. 12-13, para. 
112. 

s'' Ceylon. Dec. 2. 1969. U.N. GAOR. (XXIV.) First Committee. 170Sth Meeting, p. 8, 
para. 90; United States. Dec. 2, 1969. U.N. Mimeograph Document A/C.1/PV.1709, p. 26. 

"1 U.N. Mimeograph document A/C.1/PV.1709. p. 41. 

^2 See comment by the U.S. delegate, post., p. 86. 



84 . 

with the 1970 Declaration of Principles, was referred to by the Con- 
ference President in 1975, when he urged states to refrain from taking 
action to explore and exploit the mineral resources of the deep seabed: 

Whatever reservations States may have expressed or may entertain in regard to 
the content of those two resolutions, it would serve as an earnest of good faith 
and a demonstration of good will if due regard were paid to the letter and the 
spirit of those two resolutions, at least until we conclude a treaty or tax the patience 
of the international communit}^ beyond the limits of endurance by delaying to 
reach agreement. Too much is at stake to be imperiled by undul}' precipitate 
action. 23 

^Yhat conclusion, if any, can be drawn as to the effect and status 
of the ''moratorium" resolution? Its intent when it was introduced 
and the perception by a broad cross-section of states since its adoption 
do not identify any consensus that it is legally binding on any nation. 
Its general impact appears to be recommendable, a conclusion sup- 
ported by the vote in the Assembly on the resolution and by its 
absence from citation in General Assembly resolutions since adoption. 

TABLE V-2.-CITATiON OR REFERENCE IN GENERAL ASSEMBLY RESOLUTIONS, 1970-76, TO MORATORIUM AND 

DECLARATION 

A/RES 2574D A.RES 2749 
Moratorium Declaration of 

A/RES Resolution Principles 

2749 (XXV) (19701 Xi 

2750A (XXV) [19701 

2750B (XXV) [19701 

2750C (XXV) [19701 XX 

2881 (XXVI) [1971] X i 

3029A (XXVII) [19721 

3029B (XXVII) [19721 X» 

3029C (XXVII) [19721 

3057 (XXVIII) [19731 

3334 (XXXIX) [19741 

3483 (XXX) [19751 

31/63(19761 

» A/RES/2574D (XXIV) not specifically cited. Citation was to the group of four resolutions within A/RES/2574(XXIV), 

1970 Declaration of Principles 

Preparation of the Declaration of Principles Governing the Sea- 
Bed and the Ocean Floor, and the Subsoil Thereof, BcA'ond the Limits 
of National Jurisdiction was a central task of the Seabed Committee 
since its first meetings as an ad hoc committee in 1968. The draft, 
presented to the First Committee of the General Assembly in November 
1970 by the Chairman of the Seabed Committee, was a compromise 
text representing the ''highest degree of agreement attainable." ^^ 
Sponsors and sujjporters spoke of the declaration and its principles 
as — 

— Indications * * * Qf ^j^^, rules and the provisions of international law, pres- 
ent and future, applicable to the domain of the ocean floor and its subsoil, ^s 
— Only a basis for the j^rej^aration of a ic^ginio.-'' 
— CJuidelinos for the ('stal)lishnient of a regime. ^^ 
— The foundation and framework for an international regime. ^^ 



■-'M'nlt.'d Nations Pross liolonsn SEA/1S3, ISIny 9, 1975, pp. 3-4. 

=* Ilainilton Slilrlov Aniorasinphe on November 25, 1970. United Nations. Mimeograph 
dociiincnt. A/(M/I»V.177:{. p. 17. 

=''.Icns Kvcnscn (Norwav) on Novoml)or 20, 1970. A/C.l/PV.1774, pp. 18-20. 
=■» Delegate Iroin I'cni on NovcnilxT 'M>, 1970. A/(M/rV.1777. p. IS. 
"■ Delcu'atc Ironi Australia on NovcMnhor :{(). 1970. A/C:.l/rV.1777, pp. 23-25. 
=" Delegate from Canada on December 1, 1970. A/C.1/PV.1779, p. 8. 



85 

Although the abo\c statements lellected the consensus of vicw^ on 
the dechiration, the delegtile from one country stated: 

We do not view the pi-inciples contained in the declaration as mere f^iiidelines 
for drafting a treat.y ccitablishing the i-eginie. We rather believe that they con- 
stitute basic and fundamental principles from wliich no departure would be allowecJ 
and which should be faithfully reflected in the basic international Ireaty which 
will be the consitutent instrument of the regime.-^ 

Most nations, however, did not consider that lUo dccL-iriition was 
legally binding: 

(1) We would not see them [principles] as having any l)inding or mandatory 
effect upon States in the meantime. In our view, there can be no entry into binding 
international obligations of a multilateral nature excei)t through tlie negotiation 
and acceptance of an international treaty. We shall interpret operative |)aragraphs 
3 and 4 of the draft declaration, for example, in this light.^" 

* * * * * m 

(2) It goes without saying that this draft has no binding \'alue. We could not 
agree that it constitutes or declai-es any kind of law, for constitutional reasons, but 
in accepting it my (lovernment accepts, with jespect to the other Members of the 
United Nations and as an oijligation arising from the Charter, the frank and open 
negotiation of a convention. * * * ^^ 

*♦♦♦**» 

(3) Naturally approval by the General Assembly of this draft cannot impose 
legal conseciuences on States, since such decisions are merely of a recon\mendatoi-y 
character.3- 

******* 

(4) First, like any othei- resolution of thii General Assemi)ly, the draft declara- 
tion has in itself no binding forcc.^^ 

******* 

(5) The dechu'ation does not have l)in(ling foice or legal consequences in inter- 
national law and is without i)r(Mudic(- to existing international conventions.^* 

******* 

(6) The declaration cannot claim the binding force of a treaty internationally 
negotiated and accepted, but it is a definite step in that direction and * * * it 
has * * * that fervent element of model authority that is more binding than trea- 
ties.-" 

The declaration received nearly unanimous support. It was adopted 
in the First C^ommittee by a vote of 90 in favor, none against, with 11 
abstentions. The vote in plenary session was 108 in favor, none against, 
with 14 abstentions. The ])ositive effect of tlie declai'ation on the 
development of a treaty text can be lealized by examining table V-1. 
Similarities of language have been carried over into the articles 
of the ICNT (1977) from at least 10 of the ]:i ])rinciples extracted 
from the declaration in table V-1. 

In summary, there might be some basis for considering that the 
1970 Declaration of Principles may have some legal effect although it 
certainly cannot be viewed as incurring binding obligations on states. 
Most nations have considered the document as stating legal piinciples, 
which are now being incorporated into the text of a treaty regime. If a 
LOS treaty is not adopted by the Conference, however, it may be that 
the common heritage concept as embodied hi the Declaration of 
Principles might, in the future, attain a status in international cus- 
tomary law similar to that of the Universal Declaration of Human 
Rights. 



-oDeleaato from Kuwait on Doocmber 2. 1970. A/C.1/PV.1780. p. ;n. 
89 Delegate from Australia on November 30, 1970. A/C.1/PV.1777, p. 27. 
«i Delegate from Belfrium on December 8. 1970. A/C.1/PV.1788. pp. 24-25. 

32 Delegate from the U.S.S.R. on Deceml)er 15. 1970. A/C.1/PV.1798. p. '\2. 

33 Delegate from the United Kingdom on December 15. 1970. A/C.1/PV.1791), p. «. 
«* Delegate from France on December 15. 1970. A/C.1/PV.1799. pp. 28-30. 

35 Amerasins^he In plenary meeting of General Assembly after the vote on December 17, 
1970. A/PV.1933. p. 100. 

20-211— 7 S 7 



86 



THE UXITED STATES AND THE COMMON HERITAGE 



The United States was one of the 28 nations voting against the 
1969 '^moratorium" resolution, which it vigorously opposed.^^ US. 
representatives, however, supported adoption of the Declaration of 
Principles b}' the General Assembly. During First Committee debate 
in 1970, the U.S. delegate remarked : 

We are pleased that the yjiiuciple of common heritage is so widely supported. 
As is well known, flifferent delegations have expressed a variety of understandings 
as to its interpretation. Its meaning, in our view, is indicated by the principles 
which follow it and will be elaborated in the internationally agreed regime to be 
estal)lished. 



While it was not possible for States to agree on Resolution 2574D(XXIV), it 
was possible in the third operative principle to agree, as of now, that there shall be 
no rights with respect to the area and its resources incompatible with the regime or 
the principles of this declaration.^^ 

Seven years later, in 1977, U.S. spokesmen maintained the same 
attitude toward the common heritage and its elaboration in the 
declaration. The Special Roi)resentative of the President to the Law of 
the Sea Conference observed in Alay 1977 : 

I assure you that the U.S. Government " ^•'- * fully supports the concept of the 
"common heritage of mankind." On March 10, to representatives of the 84 
countries at the Evensen meeting in Geneva, I said: 

"The common heritage of mankind * * * is not just an abstract slogan. Our 
efforts can give it lasting oj^erational meaning * * *. This is the clear objective «>f 
those of us representing the U.S. Government. "^s 

Acceptance of the common heritage and the Declaration of Prin- 
ciples has implications for U.S. efl'orts to develop legishition creating a 
domestic regime for deep seabed mining. Richardson, in May 1977, 
also remarked: 

In accordance with our interpretation of international law, it dues not follow 
that support of the common heritage concept bars our companies from engaging 
in deep seabed mining until and imless an international seabed authority has been 
established. 

We recognize the desiral)ility of an international seabed authority to adminis- 
ter the common heritage; but we do not regard such an organization as an in- 
dispensable precondition to seabed exploitation. Indeed, if we did not take this 
position, then none of the pending bills now before the Congress would have a 
basis in international law.^" 

After the sixth session of the (^onl'erence wliich produced a seabed 
regime text viewed b}' the United States as unacceptable, Richardson 
commented again on the reUitionsliij) of deep seabed legishition and the 
common heritage: 

We simj)ly cannot agree to a regime which would unnecessarily inhibit, and 
perhai>s even prevent deep seabed development. To do so would make a mocker}' 
of the conunon heritage of mankind and reduce to a pitiful trickle the benefits 
that could otherwise accrue — not only to the entrepreneurs who will risk their 
capital, but also to mankind as a whole, in particular the devel()i)ing countries. 



■■■■" r.S. I'n'sl<l.'nt, IIMJU — (Nixon). U.S. I'lirilcipntlon in tho U.N. Uonurt by the I'rosiilenl 
to the Congress for the yenr 1909. Washington, U.S. Government Printing Offlco, 1970. 
I). 20. (U.S. Dep.irtmeut of State, publication 8540.) 

=•■ Iiiited Nations tiocuinent A/C.1/PV.179'.», p. 11. Statement after the vote in First 
Coiniiilltee. 

■" U.S. Conj-rress. Ilnii.sr. Conimlttce on International Kelntions. Siihconmilttee on Inter 
national Ort'anizations. l)eep Seahed Mining: and tiic Law of the Sea. Hearings. 9r)th Con^'.. 
iKt Hess., May 17 and IS, 1977. Washington, l^S. (.lovorniucat Printing Oflice, 1977. p. :\. 
Statement by Klliol IMcliardson. 

^" Ihlil , p. s 



87 

It is oiir vir'w that U.S. Icjiislation (•rilul)lishiiig a domestic regime for "le<p 
seabed mining will he neerled whether there is a treat}' or not .... 

As to timing, the administration believes that if there is to be any meaning to 
the common heritage of mankind, those with the technology and resources to 
make it a reality must move forward. In our view, therefore, Congress should 
continue to move forward with legislation. •'^ 

Current U.v^. Position in Committee 1 
u.s. interests 

U.S. efforts in Committee 1 ol" the I^OS Coureioiice have been 
influenced both b}' domestic and international intei-ests. Amonir the 
complex array of elements imjiinfring on the U.S. neirotiatin^^ stance 
are: 

Economic: 

The United States as a consumer of noihilc^ metals. 
The United States as an importer of nodule metals. 
The United States as an entrepreneur interested in com- 
mercial nodule recovery and j^rocessino:. 
The United States as a maritime ])ower. 
Defense : 

The United States a? a naval })ower. 

The United States as a militaiy consumer of nodule metals. 
Tnt ernational/foreitn^ policy : 

The United States as a sup])ortcr of international law 

standards. 
The United States as a partici])ant in the North-South 

dialogue. 
The United States as a practitioner of multilateral diplomacy. 

Economic 

The United States relies heavily on imj)orts foi- its su]>ply of nickel, 
manganese, and cobalt, three of the four metals ju-esent in deep seabed 
iiodules in quantities sufficient to make commercial exploitation 
profitable. To the extent that these external supplies either are ])er- 
ceived to be or are in reality unreliable, U.S. companies requiring 
assured sources of these metals would support U.S. efforts for guaran- 
teed access to seabed sources, with or Avithout a treaty. Furthermore, 
as an importer of these metals, the United States would be concerned 
over the relative cost of the metals from different sources. This has 
particular lelevance for copper, the only metal of the four foj- which 
the United States is one of the ke}^ land producers. Would land-based 
co])per decline in price with the addition of seabed somxes, or would 
(•o])per recovered b}' the United States from deep seabed mining be 
more appropriate for export? 

As a country in the forefront of the technologically sophisticated 
free enterprise undertaking, the United States and U.S. companies 
view the prospect of deep seabed mining with the same zeal and 
imagination as they did the Alaska North Slope oil discovery. Simi- 
larh', U.S. companies have anticipated free access to all deep seabed 
resources, protection against price and production controls, coverage 
by U.S. laws — tax, customs, safet}^ and antipollution — and U.S. 



^"U.S. Con^iress. Senate. Committee on Commerce. Science and Transportation and Com- 
mittee on Energy and Natural Resources. ?learin{;s. Richardson, Oct. 4, 1977. Unpublishod 
statement, pp. 5. 9-1 n. 



88 

Government diplomatic protection. The absence of such elements in 
an internationally negotiated treaty has introduced pressures for 
either (1) unilateral legislation to insure the acquisition of deep 
seabed minino; interests, (2) no treaty, or both. 

The U.S. role as a maritime power has tended to work in support of 
early adoption of a treaty, in an effort to freeze further coastal state 
expansions of jurisdiction into the high seas area. 

Defense ^' 

As a naval power, U.S. defense interests seek to insure the ability of 
naval vessels, resupply forces, and aircraft to move without hindrance 
to an}" location in the world where their ])resence may be required. 
Thus, U.S. acceptance of a 12-mile territorial sea limit is contingent 
on acceptance of a regime allowing free passage through and over- 
flight of straits used for international navigation. In addition, U.S. 
defense interests have stressed the need to insure that the legal status 
within the portion of the 200-milc economic zone beyond the territorial 
sea does not include impediments to freedom of navigation. Finally, 
the United States, as a consumer of nodule metals for defense-related 
production, has determined that there is no immediate need for 
mhieral resources from deep seabed mining.^- U.S. defense interests, 
would in all likelihood, press for the timeh' conclusion of a treaty 
which would secure freedom of navigation as indicated above and 
stabilize the nature of the numerous uses of the seas. However, 
defense interests would be alert to any efforts to secure deep seabed 
mining advantages to the possible detriment of navigational interests. 

International! Foreign Policy 

The establishment of generally agreed upon and accepted inter- 
national legal standards is one means of assuring a stable international 
framework and one goal in U.S. particij)ation in international com- 
munity efforts to draft an acceptable LOS treat}'. ''^ Other observers, 
however, argue that given the length of time already devoted to 
development of a treaty text, perhaps a com])rehensive, multilateral 
treaty is an inappro])riate mode for creation of a stable LOS frame- 
work. Thus, U.S. ])olicymakers are subjected to o])posing pressures 
with respect to continuation of the Conference. 

G77 nations have brought the international economic issues of 
NIEO and the North-South dialog into the LOS Conference discussions 
of a regime and organization to develop and exploit deep seabed 
resources. U.S. negotiators have found that resource access, pricing, 
and distribution would be subjected to unacceptable restrictions. 
Successful resolution of such jii'oblems would, no doid^t, promote 
success in other North-Soutli forums on XlEO issues, (^onversely, 
deadlock on these issues in LOS may have a negative imj)act on other 
negotiating forums. For the United States, a coordinated apj)roach to 
N1P]0 issues woidd assure credibility. In addition, successful creation 
of a viable international organization on the deej) seabed area would 

<i Sp«' C.S. C(»ii^r»»KS. House. Coinmll tee on Internatiomil Relntlons. Hearlup: on Law of 
I lie S«ii Conference. .Inly liH. 1!»77. StaJenient bv Assistant Secretary of Defense David V.. 

McCiJffert. CniMihllslied. 

« n.id. 

•'See statement l)y .Ttmathan I. Cliarney in I'.S. C()n};ress. House. Committee on Science 
and TcvliiioloKv. Sultcommlt tee on Domestic and International ScitMitlfie IManninK. Analysis, 
;ui(! Cooperation. Law of the Sea Conference. Hearing's. 95th Conp.. 1st sess.. Apr. "JO. 127, 28, 
1077. \\'asliin)u't(»n. I .S. Government Printing Ollice, li>77. p. liTH (Xo. IG). 



89 

enhance confidence in the use of international institutions rcfpiircd 
to solve other global resource problems. 

U.S. EFFORTS IX COMMITTEE 1 

When Committee 1 of the Conference met in 1977, it dealt with 
three sets of issues : 

— the system of ex])loitation; 

— the structure of the proposed International Seabed Authority; 

— procedures for the settlement of seabed disputes. 

Among the proposals pending before the committee were the 
following from the United States: 

(1) Kissinger package proposal on access to the deej) seabed for 
states and their nationals, financing of the Enter])rise, and review of 
the deep seabed system after 25 years. 

(2) Enterprise financing scheme which stressed loan guarantees by 
member states to fund the Enterprise's first operation. 

(3) Proposal on financial arrangements which would allow a mining 
operator to select either royalties or profit-sharing as a basis for 
payments to the Authorit3\ 

Both during and at the conclusion of the session, Elliot Richardson, 
the President's representative and chief U.S. negotiator at the Con- 
ference, publicl3' commented on the difficulties of developing a text on 
Committee 1 issues that would be acceptable to the United States. 
On June 13, Richardson observed: 

It is no secret that many of the delegates to this session of the Law of the Sea 
Conference have indicated that they are disappointed that more progress has not 
been made thus far. Certainlv that is the feeling of the United States delega- 
tion. * * * 

Despite the extraordinary contributions of Minister Jens Evensen during this 
past 3 weeks of day-and-night sessions, the interim draft text that resulted from 
these proceedings was not acceptable to us.** 

In spite of continual efforts during the following month, the relevant 
texts of the ICNT grew^ no more satisfactory on the deep seabed 
regime and organization. Richardson, on July 20, gave the following 
statement to the press: 

The Informal Composite Negotiating Text resulting from this session of the 
U.N. Law of the Sea Conference evidences real progress on vital issues relating 
to international security and freedom of navigation. At the same time it sub- 
stantially sets Ijack prospects for agreement on an international regime for the 
conduct of seabed mining. Both the substance of the text on this issue and the 
lack of fair and open processes in its final preparation require me to recommend 
that the United States undertake a most serious and searching review of both the 
substance and procedures of the Conference. '•^ 

U.S. POSITION IN 1978 SESSION 

During the last months of 1977, the executive branch undertook 
the review of further participation in th? Conference recommended 
by Richardson on Jul}' 20. On October 4, Richardson indicated that 
the following three essential factors would be taken into account in 
determining the U.S. posture at the next session of the Conference : 

{i) An assessment of the relative weight of our several interests in a compre- 
hensive Law of the Sea Treaty. 

<* Richardson. Elliot L., Press Conferpnce. June 13, 1977, "United States Mission to the 
United Nations," Press release USUN-44(77). p. 1. 

« Richardson, Elliot L.. Statement. July 20, 1977, "United States Mission to the United 
Nations," Press release USUN-57(77), p. i. 



90 

(ii) An assessment of the likelihood of a treat}- text emiTging from the Conference 
which would accommodate those interests. This assessment \\-ill obviously take 
into account the attitudes of other countries towards both achieving a fair and 
open process arid making the essential compromises that are necessary if U.S. 
interests are to be accommodated. 

(m) An assessment of the alternati\'es to any comprehensive treat}' which is 
likelv to result from the Law of the Sea Conference. ^^ 



<" U.S. Congre^s. Senate. Committee on Commerce, Science and Transportation, Committee 
on Eneriry and Natural Resources. Testimony of Ambassador Richardson. Oct. 4, 197 «, 
p. S (unimblished). 



VI. DEFENSIBILITY OF DEEP SEABED MINING 
OPERATIONS 

Introduction 

Only a few years ago llie Hoor of the high seas was a no man's 
hind. Anything there was available to anyone who could take it, but 
the difficulties of recovering anything from the seabed \\ere so gieat 
there was not much interest in it, except by scientists and a few 
treasure hunters. Advancing technology- conveyed the ability to 
exploit the mineral resources from beneath the sea, and this new 
capability generated interest in the submerged lands. Governments 
began to claim jurisdiction farther from shore, beyond their territorial 
seas, and by 1958 a United Nations Conference on the Law of the 
Sea was unable to agree on either the extent of the territorial sea or 
the boundary of coastal state jurisdiction over the submerged lands 
beyond the territorial sea. A Second and Third Conference on the Law 
of the Sea have thus far been unable to resolve these questions. 
Technology now enables recovery of minerals from the deep seabed, 
and the dispute over juris(]iction on tlie sen bottom has been enlarged 
accordingly. 

The (Uspute ovei' recovery of minerals from the deep seabed is 
cast in a different context from earlier disagreements which were 
essentiall}^ boundary disputes. Instead, an effort is underway hi the 
United Nations and at the continuing Third Conference on the Law 
of the Sea, to reserve the resources of the deep seabed for exploitation 
by an international authority, with the proceeds allocated by other 
than marketplace rules. This idea has gained sufficient acceptance 
that mining the deep seabed as a freedom of the high seas under the 
1958 Geneva Conventions is certain to be challenged as a violation 
of emerging customar}^ law of the sea.^ 

Deep seabed mining operations conducted under the aegis of the 
proposed international authority would probably not need to be 
defended in peacetime. In w^artime, even noncontroversial deep seabed 
mining operations would probabl}^ have to be suspended because of 
their incompatibiUty with large-scale war at sea.^ 

Some believe a successful legal defense of seabed mining operations 
conducted outside the aegis of the proposed international authorit}^ 
could be made, based on legal precedents found in the 1958 Geneva 
Conventions. This paper neither accepts nor rejects that position. 
However, an underlying assumption of the paper is that a sound legal 
defense, by itself, is not enough. The traditional practices of customary 
law development woidd force adversaries to challenge mining 0])era- 
tions in other wa3^s than fding legal papers. Prudence requires a 

1 See. for example, the remarks of Hon. Paul Engo of the Republic of Cameroon at the 
luncheon meetinjr of the Members of Congress for Peace Through Law on June 20. 1977. 
printed in the dailv edition of the Congressional Record. July 14, 1977, pp. E446S-E4470. 

- Testimony of Hon. David E. McGiffert, Assistant Secretary of Defense, before the House 
International Relations Committee on July 2.5, 1977. 

(91 ) 



92 

plan for dealing with the contingency of violent opposition if mining 
operation^^ are to be conducted without reference to the new circum- 
stances now existing. 

Dissatisfaction with proposed international arrangements for con- 
trolling mining of the dee]) seabed and impatience with the pace of 
the negotiations at the Conference on the Law of the Sea has stim- 
ulated proposed legislation that would unilaterally permit U.S. 
mining com})anies to begin exploration of the deep seabed preparatory 
to mining it. This ])ai)er examines the security-related provisions of 
the various pro])oso(l bills in the context of the assumption outlined 
above. Several questions are then developed for consideration in 
future deliberations concerning deep seabed mining policy. 

The Chaxging Ocean Regime 

The old ocean regime, marked by freedom of the high seas l)eyond the three 
mile territorial s(^a l)oundary, is obsolete because the old era of ocean politics has 
been superseded by new patterns of conflict and alignment, and new instruments 
of national i:)olicy. We are now witnessing the creation of a new ocean rc^gime by 
unilateral claims and actions, the development of customary law, international 
modus vivcndi, rules and regulations of functional international organizations, 
l)ilateral and regional agreements, and international treati<\s designed to estal)lish 
new laws of the sea.^ 

Political and technological changes since World "War IT have com- 
bined to render the prewar ocean regime as obsolete as the prewar 
power structure. The emerging new regime is being shaped by a num- 
ber of competing interests. Coastal states want to extend their control 
further to sea, while the great maritime powers seek unimpeded 
passage for their ships through any newl}" established coastal state 
jurisdiction. Poor countries want a greater share of the world's 
wealth at the expense of the wealthy nations. Technologically ad- 
vanced countries want to begin now to exploit the resources of the 
deep seabed. The less advanced countries want control of this exploita- 
tion. 

The competition is not only between countries but also between 
elements within some countries because various competing elements 
are not necessarily exclusive, or even paramount, within a particular 
country (e.g. all maritime powers are also coastal states and most 
possess advanced technology). The next two sections briefly examine 
the impact of technology and the changing political power structure 
on the regime of the oceans. 

TECHNOLOGY AND THE NEW OCEAN REQI.ME 

Tile exploitation of minerals underlying the high seas brings into conflict 
principles of two large and unwieldy l)odies of law: the "law of the s(»a" and the 
law of real property deaUng with estates in minerals. 

The law of the sea is premised on the desiral)ility of non-exclusivt^ access to the 
trackless oceans as highways of commerce. 

The world's mineral laws, despite^ the disparity of legal systems, have all evolved 
<jn the premisf.' opposite to that of the law of the sea.* 



■Osgood. Kol)iMt 10., ^Ulltary Iini)li(Htlons of New Ocean I'olltlts. A(h'l{)hl l'u|>«^rs. 
riimihcr One Hundred and 'J'went.v Two : I'owiT nt Sfiu : 1. The New Envirounjeut. London : 
The Intcrnutioniil Institute for Str!ite;,'l(.' Studies. 1970. p. 10. 

* I'roiii an address bv Norilieutl FAy ;;Iven at a workslioi) on Marine Resources, sponsoreil 
l.v fti.' A'lieilcan |{;ir Ass.K-lutlon Nallonul JnstUufe. .luly 7-10. 1S17(> at Lon« Fieaeh. CaUf.. 
I In Siiniinary of Troeeedln^'s inil)lished l»y the Aniei-iean TJar Association, l0(»7. ) 



93 

Successful mineral laws express a bargain in which some authority, 
in exchange for various benefits, grants the miner exclusive right to 
occupy an area in which money is to be spent to find minerals, and the 
exclusive right of exploitation for a period sufficient to justify his in- 
vestment. The benefits to the authority are taxes, royalties, and, often 
participation in the working interest through some kind of joint 
structure. 

The ability to exploit minerals lying under the seas created pressure 
to extend these bargains, long in effect ashore, to the ocean bottom — 
first of the territorial sea, then beyond that to the seabed underlying 
the high seas. In 1945, the United States' unilateral declaration of 
exploitation rights on the continental shelf set a precedent which was 
soon followed by other nations. By 1958, the new principle became 
part of treaty law as a result of the First United Nations Conference 
on the Law of the Sea held that year in Geneva. The Convention on 
the Continental Shelf adopted by the Conference extends sovereign 
rights over the adjacent continental shelf to coastal states to the limit 
of exploitability, but seeks to preserve traditional navigation and 
other high seas rights and privileges in, on and over the associated 
water column by appropriate language in other articles of the treaty. 
However, the treaty provides that the consent of the coastal state is 
required for research conducted on its continental shelf, and thus the 
traditional ''high seas" freedom of scientific research is circumscribed 
to that extent. 

Advancing technology has made possible the exploitation of min- 
erals beyond the limits of the continental shelf and margin and the 
Third United Nations Conference on the Law of the Sea is considering 
ways of extending the basic miner's bargain to the deep sea bed. 
Technological change has thus rendered existing law of the sea obsolete 
and unsatisfactory, twice in the past 30 years. 

POLITICAL CHANGE AND THE NEW OCEAN REGIME 

The breakup of colonial empires in Asia and Africa incident to 
World War II and its aftermath created many new sovereign coastal 
states. As colonies these states had been part of economic systems in 
which they produced commodities in exchange for processed and man- 
ufactured products from an industrialized metropole, sometimes to 
the perceived economic disadvantage of the colony. Ocean transport, 
which made this exchange possible was owned or controlled by the in- 
dustrial nations. 

Political independence, by itself, did not appreciably change the 
economic dependence of the former colonies on an industrialized 
market for their commodities, or on sea transport. Economic indepen- 
dence seemed to require development of indigenous processing and 
manufacturing capabilities. Almost all of these countries embarked 
upon industrialization programs. 

The developing states do not necessarily agree with the law of the 
sea as it had evolved under their former imperial rulers because in 
their view it accords the needs of distant maritime powers undue 
priority over the interests of coastal nonmaritime states. They have 
joined with other, more mature, commodity-producing states of 
South America, and with China and Canada, to push for a new ocean 
regime that accords more control by coastal states, not only over ad- 
jacent seabeds, but over the water column as well. 

20-211—78 8 



94 

For the developing states, the change in ocean regime is part of 
their thrust for a ''new international economic order" intended to give 
them a larger share of the world's wealth at the expense of the indus- 
trial states. The developing states want exploitation of the minerals on 
the deep seabed controlled by an international authority that would 
favor them in distributing the proceeds. In exchange, it appears 
they would be willing to grant continued navigation rights to maritime 
powers, most of whom are also industrial powers. This linkage — sea- 
bed mining issues and navigation issues — affects different interest 
groups in different ways. Third world countries view it as an important 
lever to help them achieve their economic goals. Naval and maritime 
interests see it as a means of arresting encroachment by coastal states 
on the freedom of navigation. On the other hand, mining interests see 
it as mischievous since it encourages dispute with their own domestic 
maritime and naval interests. 

In 1969 the developing countries succeeded in passing a United 
Nations General Assembly Resolution (2574-XXIV) declaring a mora- 
torium on all exploitation of the deep seabed resources pending es- 
tablishment of an international deep seabed regime. This nonbinding 
resolution was passed over the objections (and votes) of the developed 
nations, including the United States. In 1970 another General As- 
sembly resolution (2749-XXV) declared the deep seabed ''as well as 
the resources of the area, are the common heritage of mankind." The 
United States voted for this resolution. But the U.S. State Department 
representative takes the position that "common heritage" does not 
mean "common property."^ 

Whether the developing countries have the political leverage to 
achieve their economic objectives is uncertain. What is certain is that 
the old ocean regime no longer satisfies the majorit}^ of the coastal 
states and has, therefore, lost some of its legitimacy. 

EXAMPLES OF LAW OF THE SEA RELATED CONFLICTS SINCE WORLD WAR II 

Since World War II, disputes over various aspects of the ocean — 
national jurisdiction, straits, islands, fisheries, pollution, offshore chill- 
ing, to name a few — have been numerous. There is no region of the 
world which has not been involved in one way or another with such 
disputes. 

Though there ai-e many examples of states successful]}^ negotiating 
ocean-related questions, as in the case of the delimitation of the 
seabed in the North Sea, serious conflicts have arisen in other circum- 
stances when a different mix of geopolitical and economic factors 
have led to shooting incidents and mihtary involvement. These have 
included fishery disputes such as the so-called tuna wars and the 
cod war, and other ocean resource-related disputes — })articularly 
in connection with offshore oil exploration and exploitation — such as 
those that have arisen in the Aegean and China Seas. A brief discussion 
of some of the more threatening conflicts of the past and of the nature 
of the provocations involved highlights the hazards inherent in the 
])resent state of the law of tlie sea. 



T'.S. Coriffross. Sfnato, Siihconniilf teo on Inlorlor nnd Insular Affairs, Ocop.n Manjranese 
NodulcK (2(J odltloii). rrcparcd by the Con^rfsslonal Research Service, 94th Cong., 2d 
Hess., Conunittee print., Fohnuiry 11J70, p. J)U. 



95 

Fishery cases 

Of all the ocoan-related problems, fisliintj: disputes arising from 
disagreements over the outer limits of national jurisdictions have 
been the most universal and numerous. Many have involved naval 
vessels and shooting incidents. For examj)le, conflicts over fishery 
rights have taken place off the coasts of South Korea, China, and the 
Soviet Union. In the Mediterranean alone, disputes have arisen 
between Spain and Morocco, Italy and Tunisia, and All)ania and 
Yugoslavia. All of the Mediterranean disputes have involved seizures 
and fining of fishing vessels as well as exchanges of fire between 
naval vessels. And in the case of the Albania- Yugoslavia dispute, an 
Albanian fisherman was shot and killed. 

But the most long-lnsting disputes over fishing rights have been 
ofT the coasts of Peru, Ecuador, and Chile (the tuna war)^ and ofT the 
coast of Iceland (the cod war) . These conflicts are significant not only 
in terms of triggering the redefinition of certain traditional ocean law 
precepts and evolving new legal concepts, such as a 200-mile economic 
zone, but in terms of reflecting attitudes of coastal states toward 
distant maritime powers when the former believed that the primary 
resource upon which their economies depended were being threatened. 
It is noteworthy that these often small and relativeh^ weak countries 
have been willing to risk def^dng major powers, and to use naval force 
against any such countries, including the superpowers, that they have 
concluded were threatening their resources — and this long before the 
oil embargo in 1973 focused w^orld attention on the dependency of the 
industrialized nations on the resources of the developing countries. 

It is also significant that the determination of the Latin American 
countries to control the contiguous sea area 200 miles oft theii* respec- 
tive coasts intensified as oil exploration increased and the technology 
for recovering offshore oil, and other minerals become available. 

The "tuna war^' 

Disputes over fishing rights, initially tuna fishing, though other 
kinds of fishes and shellfish w^ere also involved, between the United 
States on the one hand, and Peru, Ecuador, Chile, on the other^ 
have flared up sporadically throughout the fifties, sixties, and seven- 
ties. They have stemmed from the claims by Chile and Peru in 1947, 
and of Ecuador in 1951 of sovereignty and exclusive jmisdic'tion 
over 200-mile economic zones off their respective coasts which the 
United States refused to recognize. 

Beginning in 1951, there were a series of seizures and finings of 
American tuna boats off the coasts of these countries on grounds 
of illegal fishing. Latin American naval officers boarded such vessels 
and naval ships escorted them to various Latin American ports. 
The situation heated up perceptibly in December 1957, when a 
Chilean airplane fired across the bow of an American tuna boat 20 
to 25 miles off the coast of Chile. Incidents involving some form of 
harassment recurred almost every year — some of which involved 
other Latin American countries including Colombia, El Salvador, 
Honduras, Panama, and Mexico. As recently as November 1976, 
U.S. fishermen were being injured in fights with Latin American 
boarding parties and were demanding protection by the U.S. Navy. 

« For a general background discussion of fishing controversies with Latin American 
countries in general, see : Hagen, Virginia M., The Latin American-United States Fishing 
Rigsts Controversy, with specific reference to Chile, Ecuador, and Peru. Congressoonal 
Research Service. Multilith HE 740, Feb. 12, 1969, 32 p. 



96 

The U.S. proposals for arbitration by the International Court of 
Justice were unacceptable to Chile, Ecuador, and Peru because none 
of these countries had accepted the compulsory jurisdiction of the 
Court. Repeated efforts to negotiate fishing conservation agree- 
ments with the countries involved met with failure. 

In response to the boat seizures and large fines, the United States 
resorted to economic pressure against the offending countries. Con- 
gress amended the Foreign Assistance Act of 1961, to prohibit fur- 
nishing assistance to any country which seized or imposed a penalty 
or sanction against any U.S. vessel on account of fishing activities in 
international waters unless a case was favored by an international 
agreement to which the United States was a party.^ In addition, the 
Foreign Military Sales Act of 1968 prohibited the sale of any defense 
articles or service to such countries unless the President saw fit to 
waive these provisions on grounds of the security of the United 
States. 

During 1977, the "tuna war" has been quiescent — presumably due 
to the increasing trend toward general recognition of the 200-mile 
economic zone and to the passage by the U.S. Congress of the Fishery 
Conservation and Management Act of 1976, which establishes a 200- 
mile fishery zone off the coasts of the United States. Moreover, the 
U.S. tuna fleets have not been fishing in such great numbers off 
Latin American coasts. 

The ''cod war'' 

Over a period of 20 years Iceland and Great Britain have had 
three serious disputes and conflicts over fishing rights in Ice- 
landic waters. The last two involved cut trawl lines, shots across the 
bows of fishing vessels, and numerous collisions. 

As in the case of the ''tuna wars" the conflicts arose over the refusal 
of a distant maritime state to recognize the unilaterally asserted rights 
of a coastal state, and demonstrated the willingness of a minor power 
to challenge a major industrial ])ower over resources deemed vital 
to its econom}'. For Iceland, whose sole resource is fisheries, the 
dispute with Britain over fishing rights was perceived as a matter of 
national survival. 

The ''cod war" also had serious international and strategic overtones 
since it involved two members of NATO, and resulted in a threat by 
Iceland to withdraw and deny the alliance the use of her i)orts and 
airfields. Other NATO members therefore became involved, putting 
l)ressure on both countries to resolve their disagreements, but ulti- 
mately persuading Britain to back off. 

The first dispute occurred in 1958 and was settled without major 
international involvement. The second dispute began in 1972, when 
Iceland unilaterally extended its exclusive fisheries jurisdiction to 50 
miles, and ended in 1973 with a truce that ])rovi(led for the withdrawal 
of l^ritish warshii)s. The dispute had been submitted to the Inter- 
national Court of Justice in April 1972. In 1974 that Court ruled that 
Iceland was not entitled to unilaterally impose restrictions on fisheries 
out to 50 miles. But on July 15, 1975, Iceland issued regulations 
extending fisheries jurisdiction to 200 miles, effective October 15, 1975, 
thus defying the ruling of the Court. 



7 This ban was temporarily llftrd whllo Chllo, Peru, and Ecuador mot with tho United 
States to discuss flshlnp Issues. With the failure to reach any agreement, and the repeated 
seizures of U.S. flshlng ves.sels by Ecuador between January and March 1971, the ban was 
reimposed. 



97 

Britain ag:ain dispatched warships to protect its trawler fleet a^^ainst 
harassment by the Icelandic coast guard. By June 197G, when Britain 
and Iceland signed a new 6-month truce, dozens of clashes and shooting 
incidents had occurred (though no deaths), Iceland had threatened to 
withdraw from NATO and had severed relations with Britain, the 
fii'st such rupture between two members of NATO in its history. 
Moreover, in early January of that year, Icelandic fishermen had set uj) 
roadblocks at the communications station and radar stations of the 
American-manned miUtary base to put pressure on the United States 
to persuade Britain to desist. 

Britain did ultimately back off, in part because of pressure from 
other NATO members, and in part because British domestic coastal 
state interests became engaged due to the increasing importance of 
North Sea oil resources and the desirability for Britain to extend her 
own jurisdiction farther seaward. 

Other fishery incidents off coasts of Latin America 

In the period while the ''tuna war" was in progress, other disputes 
over maritime rights occurred. In 1970, Mexico seized two U.S. boats 
in waters claimed by Mexico. This event was so delicate that neither 
country revealed it for 2 weeks. Nor was the United States the only 
country involved in a dispute with Latin American countries over 
fishing rights. For a number of years, France and Brazil had an 
ongoing dispute over French fishermen fishing for lobster and shrimp 
within Brazil's 12-mile fishing limit. In 1963, this erupted into the 
so-called lobster war. Though France subsequent!}' agreed to employ 
Brazilian fishermen on its boats, in 1966, Brazil seized a number of 
French fishermen. 

Fishing vessels of Canada, Germany, Spain, Cuba, Japan, and the 
Soviet Union have also been involved in disputes with one or more 
Latin American countries. This situation became particularly tense in 
the summer of 1968, when Soviet vessels were first seized in May by 
the Brazilian Navy and held for 10 days until the Soviet Union had 
apologized; and twice in June — first by Venezuelan and then by 
Argentinian naval vessels. In the latter instance, one of the Soviet 
vessels escaped while being escorted to port, but the second was held 
17 days and the Soviet IJnion paid a fine of $25,000. In addition, 
Uruguay protested that the Soviet Union had violated its territorial 
waters. 

Oil exploration 

Since the Arab oil embargo in the fall of 1973, the subsequent great 
oil hunt has precipitated a number of ocean-related disputes between 
and among nations. In some instances, it has reactivated long quiescent 
disputes among nations as in the case of China and Vietnam in the 
South China Sea. In other instances, offshore exploration has aggra- 
vated or compounded already existing diplomatic problems between 
States as in the case of Turkey and Greece. Even in the North Sea 
where boundary delimitation among Great Britain, Norway, Denmark, 
the Netherlands, Germany, Belgium, and France, proceeded relatively 
smoothly, certain incidents have occurred in connection with Britain's 
offshore oil drill ing:. 



98 

The Para eel group 

The Paracels along with three other island groups — the Spratlys, 
the Macelesfield Bank, and the Pratas — are located in the South 
China Sea — an area believed to be rich in oil and mineral deposits and 
the subject of controversial issues among the community of nine^ 
coastal states, including British Brunei, which comprise the region. 

The Paracel Islands^ have been claimed primarily by China and Viet- 
nam — China dating its claim back to 206 B.C.-A.D. 220, and Vietnam 
back to 1802. On the basis of post World War II settlements, the 
islands are also currently claimed by Taiwan. Upon the defeat of 
Japan, which had occupied the Paracels and the nearby Spratlys® 
during the war, the Paracels were restored to China. In December 1946, 
the Nationalist Government of China (KMT) placed stone markers 
on the islands. South Vietnam again claimed the islands in 1951, and 
followed up its claim with periodic decrees claiming sovereignty over 
the Paracels. 

Until the 1970's, however, for a number of diflerent reasons, none 
of the contenders had pressed their positions very forcefully. Only with 
the discovery of oil off the Spratlys, the realization that in view of the 
shallow seabed of the South China Sea its wealth was technologically 
accessible, as well as growing recognition of the strategic value of the 
area as a whole, did the countries concerned become more assertive and 
active in the pursuit of their respective claims. 

Reportedly on July 1, 1971, U.S. reconnaissance planes had detected 
a naval complex under construction by the Chinese on Woody Island, 
one of the largest of the Paracels. ^° 

In September 1973, South Vietnam issued a decree incorporating the 
Spratlys as part of the South Vietnamese Province of Phuoc Tuy 
and claiming sovereignty over the islands. 

In November of that 3^ear, China, in what appears to have been a 
warning to South Vietnam printed in a newspaper, asserted that "some 
of the islands still have not returned to the hands of the Chinese people" 
and stated that ''all islands belonging to China must also return to the 
fold of the Motherland." China took a firm public stand January 11, 
1974, however. Protesting Vietnam's brazenannouncement of September 
1973, a Foreign Ministrj^ statement emphasized that the natural re- 
sources in the sea surrounding all these islands also belonged to China 
and that no infringement of China's territorial integrity and sov- 
ereignty would be tolerated. 

This pronouncement was ignored by South Vietnam. China then 
sent warships and fighter-bombers to spearhead the landing of 
Chinese combat teams in some of the Paracel Islands. And on January 
19 and 20, Chinese troops overwhelmed a small Vietnamese garrison 
and gained total control of the Paracel group. ^^ 

While this action by China involved the assertion of territorial 
rights and confirmed the strategic importance of the South China Sea 
to China — particularly vis a vis the Soviet Union — it also served as a 
warning against intrusion by other interested contenders for these is- 

** Ton, If land-locked Laos Is Included. 

"T(mI;iv. the Si)nitlvr jirc claimed hv the Socialist Repul)lic of Vietnam, tbe Philii)|)ines. 
Taiwan, and tlie Teople's Kepubllc of Clilna. All, except the People's Republic of Chinn, 
malnluin pirrlsons on llio Spraflv Islands. 

1" Iloiiff KonK Standard, .Tuly H, 1971. 

>' For iri'iK-ra! bacU-n.iiiwI disctissinn of the Sonlli ri)ina Sea sitiialitui, sec: Rivalry in 
the South China Sea. China Report, March-April 1977 : 3-S. 



99 

lands and gave notice that China is very serious concerning claims to 
natural resources of this area. 

Nonetheless, neither the Socialist Republic of Vietnam nor the Philip- 
pines — both of which are actively involved in offshoi-e oil ex])loration — 
nor any of the other contenders have given any indication that they 
have agreed to relinquish this area to China, and there is no evidence 
to date of any pending final settlement of the conflicting territorial or 
maritime disputes. 

The Aegean Sea: The Greek-Turkish dispute 

The quest for oil in Aegean waters by Turkey triggered a dispute 
between Greece and Turkey in 1974, which focused on the question 
of ownership rights on the Continental Shelf. At that time 'J'urkey 
sent a ship, Seismic I, to make surveys of the Aegean seabed. Greece 
claimed that the Turkish vessel had gone into areas which were part 
of the Greek Continental Shelf and that Greek sovereign rights had 
been violated. Greece and Turkey have long differed over various 
ocean-related problems in the Aegean Sea. For instance, they have 
disagreed over ownership of certain islands as well as the definition 
of the Continental Shelf. Greece adheres to the 1958 Convention on 
the Continental Shelf, CSC, since its provisions generally conform 
to the Greek contention that the islands have the right to have a 
full continental shelf. Turkey does not adhere to the CSC and takes 
the position that claims to the Continental Shelf should be based on 
such factors as the median line between the two mainlands, the line 
of greatest depth over the seabed — based on the natural prolongation 
of the Anatolian mainland — and the population balance in the islands, 
which favor Turkey. 

In addition to sending its research vessel into Aegean waters during 
the 1974 dispute, Turkey also resorted to a number of other tactics 
such as press campaigns, military mobilization, and demonstrations. 
These develo[)ments along with the presence of Turkish escort vessels 
and of Greek shadowing ships in the Aegean Sea raised a real fear 
that war would erupt. 

In 1976, conflict again threatened but was averted by pressures 
brought to bear b}' NATO countries Jand by U.S. mediation efforts. 
This resulted in an agreement in November of that year between 
Greece and Turkey in which they agreed not to engage in provoc- 
ative actions, and to enter into bilateral talks in order to work out a 
mutually acceptable seabed boundarv. Since that time, the dispute, 
while far from settled, has been under control. 

The Aegean Sea dispute is one of the most threatening in terms of 
military- involvement of all the current ocean-related disputes. It 
also provides some significant parallels to other more serious disputes 
past and present. For example, the Aegean Sea dispute, like the 
Paracel group dispute in the South China Sea, is but one of many 
disputes between the countries involved. Like the disputes among the 
states comprising the South China Sea community, the Aegean Sea 
controversy between Greece and Turkey is complicated by an array 
of additional longstanding disputes including Cyprus and ownership 
of various islands in the Aegean Sea. 

There are also certain parallels between the Aegean Sea dispute 
and the *'cod war." The latter originated as a local issue between two 
countries over fishing rights. Ultimately it became a source of pro- 



100 

found concern to the United States and Western Europe. Because 
the disputants were both members of NATO and because of the 
uniquely strategic location of one of the parties to the dispute, it 
was feared that if that dispute got out of hand, the northern flank of 
NATO would be jeopardized. Similarh^, though the dispute over the 
Aegean seabed is a local issue, it, too, became a source of deep con- 
cern to the United States and the Western World, as it was feared 
that NATO's southern flank would be jeopardized should conflict 
result. 

It is clear from the examples of disputes discussed in this section, 
that ocean-related problems can and have posed serious threats to 
world peace. For years, such disputes have involved shooting incidents 
and the use of naval power. 

THE THIRD UNITED NATIONS CONFERENCE ON THE LAW OF THE SEA 
AND THE DEVELOPMENT OF CUSTOMARY INTERNATIONAL LAW 

There are some who hold that a new treaty on the law of the sea, 
while desirable, is not necessaiy and might even be disadvantageous 
to the United States in some particulars. Those who hold this position 
assert that customary law of the sea, as established over the past 
several hundred yesLTs and as codified to a great extent in the 1958 
conventions is still adequate to govern the rights and duties of those 
who use the seas. This position is rejected by others who assert that 
emerging consensus on a number of issues at the conference has had 
the effect of estabUshing new customary law already, and therefore 
the old ocean regime can no longer be relied on in those instances. 
Examples are the acceptance of the 12-mile limit for the territorial 
sea and the concept of the 200-mile economic zone. According to this 
view, a new treaty is needed to arrest the trend toward further ex- 
tension of coastal state control over areas formerly considered high 
seas under the old regime. ^^ 

Whether the concept of the ''heritage of mankind" and its associated 
moratorium resolution are now a part of customar}^ law of the sea is a 
contentious issue. Consensus probably cannot successfully be claimed 
concerning the moratorium itself, as the vote on the resolution and 
subsequent negotiations at the conference clearly imply disagreement 
with it. However, the ''common heritage" resolution had substantially 
more support when passed, and negotiations at the Conference have 
accepted the principle while concentrating on arrangements for carry- 
ing it out. 

A NEW LAW OF THE SEA TREATY? 

Discussion of the issue whether or not a comprehensive treaty 
setting forth a new law of the sea in enough detail to be useful in 
settling disputes can be negotiated is be3'ond the scope of this chapter. 
An acceptable treat}^ may emerge that permits mining the deep seabed 
under conditions compatible with the free enterprise system in which 
U.S. companies floudsli. But this section raises the possibility, and 
})rovides some consideration of the likely impact, if a treaty is long 
delayed or never is negotiated. 



^ For a olonr oxchnnpo of views on these points see : U.S. Congress, House, Committee on 
Science? and 'rochiiolo>,'v, Subconimlttoo on Donit^stic nnd International Scientific Planning, 
Analysis and Cooperation. Hearings: The Law of the Sea Conference, Apr. 2G, 27, 28, 1977, 
DnthCong., 1st sess., pp. 173-17G. 



101 

There is a widcl}' held feehng that the disj)uted stakes and com- 
plexity of negotiations for a new treaty on the law of the sea makes 
early agreement unlikely. The large number of participants, the 
variety of interests and issues, the politicization of the Conference, 
and, in particular, the linkage of seabed mining issues to navigation 
issues b}' the developing nations all make for protracted negotiations. 
The more pessimistic observers believe tie ideological differences and 
important national interests involved will preclude any agreement 
which can be accepted by all, or enough of the world community to 
constitute a useful treaty. However, they do not rule out an agreement 
in which these real differences are covered over by obfuscation.'^ Other 
possible outcomes besides an acceptable, comprehensive treaty are a 
partial agreement that would leave unnegotiated differences for other 
forums, a treat}^ accepted by a ''majority," but not adhered to by 
some key nations or groups of nations, conversion of the Conference 
to a permanent negotiating forum for law of the sea issues, or some 
combination of these outcomes. 

All agreement could cover over real differences by obfuscation, vague 
language, or other inexact provisions, as was done in the 1958 treaty 
provisions concerning the limits of the Continental Shelf and breadth 
of the territorial sea. Such a treaty would shift the settlement of the 
unnegotiated differences to the development of customary law, 
bilateral and regional agreements, modus vlvendi, and other forms of 
international law which have traditionally preceded the development 
of international conventions. This outcome would not be very different 
than the situation existing today in which there is agreement on all but 
a few (very important) points, but the points in dispute might be 
different. The process of claim and counterclaim, political maneuver- 
ings in regional and other international forums, unilateral actions and 
reactions, et cetera, would continue. Other outcomes listed above would 
be variations on this result. Given the politics of the Conference, any 
treaty that could be negotiated would probably reflect Third World 
desires to a greater degree than existing conventions do. If that 
occurred, those countries would be better able to advance their claims 
under ^'emerging" customar\^ law than is now the case. 

IMPLICATIONS OF SEABED MIXING IN THE ABSENCE 
OF AN ACCEPTABLE TREATY 

Deep seabed mining conducted by U.S. companies in absence of a 
treaty, or in disregard of a treaty considered unacceptable by the 
U.S. Government, would be a part of the claim/counterclaim, action/ 
reaction process whereby customary international law is defined. 

In the development of the law of the sea by custom, individual states make 
claims about the nature of the law by way of their own maritime practice. If 
these claims are left unchallenged and if the practice forms a pattern and is of 
long standing, then a new customary law may be said to develop. If, on the other 
hand, claims by one state are challenged by counterclaims from other states, and 
if one nation's practice is countered by the contrary or opposing practice of 
another nation, then the customary process continues until either the claim or 

" The principal source of this section was Knight, Gary H., Consequences of Non-Agree- 
ment at the Third U.N. Law of the Sea Conference. Washington : The American Society of 
International Law, 1976. [Other sources are cited as they occur in the text.] 



102 

the counterclaim predominates. This customary process of developing inter- 
national law need not be easy. It may never lead to results. But where nations 
cannot or will not agree on written rules, the customary process is an alternate 
way to develop international law.^* 

Since over 100 nations are committed to the principle that deep 
seabed minerals are part of the ''heritage of mankind" and thus may 
be subject to the moratorium on mining, a unilateral decision by the 
U.S. Government to license mining operations would probably be 
challenged. These challenges might take the form of protests in inter- 
national forums, lawsuits both in the U.S. courts and in the courts of 
foreign countries against the companies engaged in mining the seabed, 
support of political opposition wathin the United States against seabed 
mining on environmental or other grounds, economic or political 
sanctions, or resort to force. Since the linkage has been made at the 
Law of the Sea Conference between seabed mining and navigation 
rights, sanctions or resorts to force might be directed either against 
the miners themselves or against U.S. maritime commerce gener- 
ally. Failure to respond appropriately to challenges would have the 
effect of abandoning the claim to the right to mine the seabed beneath 
the high seas. 

Defensibility of Deep Seabed Mining Operations in the 
Absence of an Acceptable Treaty 

The preceding section identified a number of different ways in which 
deep seabed mining operations undertaken b}^ U.S. companies in 
the absence of an acceptable law of the sea treat^^ might be challenged 
by nations or subnational groups who feel that these operations 
threaten to appropriate the ''heritage of mankind" for selfish pur- 
poses. This section will address defense of mining operations against 
violent challenges. 

There is no intent to imply that violence is the most likely form 
challenges to U.S. mining of the deep seabed may take. Legal or 
political challenges are, in fact, more likely because of the powerful 
retaliatory capabilit}^ of the U.S. militar}^ establishment. But the 
history of development of customary law of the sea is filled with 
resorts to low level violence as a supplement to other measures. Pru- 
dence req[uires that the possibilit}^ of violence be considered although 
its intensity might be very low. 

possible security threats to U.S. DEEP SEARED ]\IINING OPERATIONS 

Current concepts for mining the deep seabed involve ships towiug 
deep sea dredges, either bucket or suction operated, at speeds from 
2 to 4 miles an hour. With gear working, these ships are vuhieiable 
to various kinds of hostile actions. Few in number and operating in 
well defined locations, they could be subjected to liarassment, sei- 
zure or even sinking. The sophistication of the hostile element might 
range from naval and air units of a Third World power or powers to 
ordinary commercial craft in the hands of terrorists or other sub- 
national groups. Harassment, the most likely hostile action, could 
take the form of close ])asses to the mining vessel, intended to ob- 
struct movement, deliberate fouling of the dredging equipment, 



"Mark W. Jnnis, Seapowor and the Law of the Sea, Lexington. Mass.: The Lexington 
Press, lUli), p. 7(5. 



103 

setting off explosive cliarges in tlie near vicinity of the mining vessel, 
deliberate collision and similar actions designed to impede operations. 
Seizure or sinking, though probably less likely, are equally feasible 
actions against undefended mining ships should the challenger decide 
on that course. Harassment and seizure are most easily accomplished 
frorn another vessel. Either ships or aircraft could carry out a decision 
to sink a mining vessel as a challenge to the claimed right to mine the 
deep seabed. Submarines, available in a number of Third World navies, 
could sink mining vessels anonymously. 

DEFENSE OF DEEP SEABED MINING OPERATIONS 

Active defense of seabed mining operations would involve establish- 
ing a defensive perimeter of sufficient size and sophistication to 
deal with the hostile forces likely to be brought to the scene. This 
might range from simpl}^ arming the mining vessels to defend them- 
selves against minor threats to provision of sophisticated surveilance 
and escort forces if defense against a severe threat is required. 

If the only response to violent challenges to the right to mine the 
deep seabed was to provide escort forces, the number of different 
mining locations that would have to be defended might eventually 
be numerous enough to overburden available naval and air power. 
A more efficient measure would be to extend to seabed mining op- 
erations the same kind of deterrence that currently operates to 
protect other U.S. maritime operations from molestation. Linking 
the mining operation to the military deterrence continuum by suit- 
able official statements and military demonstrations might be ef- 
fective against single nation threats. A more generalized threat 
by all or most of the developing countries could possibly be met 
by negotiating an offsetting defense agreement among the industri- 
alized countries similar to the fisheries protection agreements in 
the North Sea. In addition to the mifitary responses enumerated 
above, political and economic measures, both negative and positive, 
could be taken to strengthen deterrence. 

POSSIBLE RETALIATORY ACTIONS AGAINST U.S. MARITIME OPERATIONS 
OTHER THAN DEEP SEABED MINING 

As previously noted, linkage at the Thu'd Law of the Sea Confer- 
ence of deep seabed resource issues to navigation issues could lead 
to linkage of these issues in the arena of customary law development. 
Acceptance of 200-mile economic zones and 12-mile territorial seas 
by most of the countries participating in the Conference has advanced 
those concepts sufficiently that even if no treaty is agreed on the 
extension of some degree of coastal state jurisdiction can probably 
be sustained as emerging customary law. 

The status of the navigation rights within economic zones is still 
in dispute in the conference context. But the coastal states unhappy 
over U.S. deep seabed mining operations could be expected to assert 
comprehensive jurisdiction over their 200-mile economic zones in 
retaliation. This could result in significant harassment of U.S. mari- 
tim^e operations other than deep seabed mining. 

Three U.S. maritime interests would be adversely affected by the 
imposition of coastal state jurisdiction over the 200-mile economic 
zones amounting to practically the same control as is now accei)ted in 



104 

the territorial sea. First, naval and military operations in such sen- 
sitive areas as the Mediterranean, Caribbean, China, Japan, and 
Yellow Seas could be circumscribed to our disadvantage. Second, 
commercial na\^gation could become subject to unreasonable, costly, 
and time-consuming interference both at sea and in port. Third, 
scientific research mthin the economic zones could be prevented 
or severely restricted. Beyond this, future uses as yet unknown 
of the formerly high seas areas, now included in the economic zones, 
could be denied us.^^ Retaliatory navigation restrictions would not 
be a direct challenge to the claimed right of the United States to 
mine the deep seabed. The efficacy of such an action as a means 
of asserting a challenge leading to farther development of customary 
law concerning seabed mining is questionable. However, by raising 
the issue of navigation rights in the economic zone outside the con- 
text of the Law of the Sea Conference, these nations would be con- 
tinuing the linkage established at the Conference between seabed 
mining and na\dgation rights. Unless the United States was willing 
to abandon these navigation rights in the arena of customary law 
of the sea development in exchange for the seabed mining right, 
a trade-off we have been unwiUing to make at the Conference, 
navigation restrictions imposed by coastal states would have to be 
challenged. 

RESPONSE TO COASTAL STATE CLAIMS OF C0:MPREHEXSIVE 
JURISDICTION OVER THEIR ECONOMIC ZONES 

Imposition of navigation restrictions on U.S. shipping in economic 
zones by Third World nations in retaliation for U.S. sponsored deep 
sea mining ventures could be countered by court challenges, reaction 
in international forums, retaliation in kind or in alternative forms 
against offending nations, or the forcible exercise of the disputed 
navigation rights b}^ U.S. vessels. 

Continuing the focus on the problems raised by violence against 
U.S. maritime operations, this section will address only those possible 
U.S. responses likeh' to lead to potentially violent confrontations. 
In this category are the imposition of counterrestrictions on maritime 
operations of offending countries, and the forcible exercise of disputed 
navigation rights by U.S. vessels. 

The imposition of counterrestrictions on the maritime operations 
of the other nations outside our own territorial sea could strengthen 
their claim of a right to exercise control within their economic zones. 
Within this limit, however, the United States possesses, sufficient 
maritime power to enforce considerable restrictions against any other 
nation's shipping with minimum risk of reprisal. ^^ Whether the United 
States is more or less vulnerable to this kind of action/reaction than 
the adversary nation(s) would be the major consideration in assessing 
the efficiency of counterrestrictions. To favorably influence the 
development of customary law, the other nations would have to be 
persuaded to relinquish their claimed control over navigation within 
their economic zones. For the imposition of counterrestrictions to be 
effective, our adversaries would have to suffer unacceptably because 

i» Jonathan I. Charncy, "Law of the Sea : Breakinff the Deadlock," In Foreign Affairs, 
April 1!)77. p. 000. 

" Tnlted States seizure of Soviet fishing vessels In our economic z»ue In March 1977, 
Is a ca.se In point. 



105 

of our actions, and we would have to be able to accommodate their 
restrictions on our navigation for the time necessary to resolve the 
issue. The risk in this course of action is the possibihty that failure 
would strengthen the legal ])osition of all coastal states in their claims 
to exercise control over navigation within their economic zones, tlius, 
in effect, converting them into territorial seas. 

Imposition of count errestrictions to navigation would be an in- 
direct response to claimed control by coastal States over navigation 
rights within their economic zones. The forcible exercise of the dis- 
puted navigation rights by U.S. vessels would be a direct response 
and this has been our usual action in the past. The Mayaguez affair 
was the most recent example, but there have been others, such as our 
transits of the Red Sea and the Tiran Strait, periodic visits by the U.S. 
6th Fleet units into the Black Sea, and 7th Fleet transits of the 
Indonesian Archipelago. The British Navy has similarly asserted 
navigation rights agamst coastal state claims in a number of cases. ^^ 
These assertions of claimed navigation rights have, however, in- 
volved small numbers of ships in isolated instances. The prospect 
under consideration here is of a more widespread situation in which 
several countries with considerable international backing simul- 
taneously claim control over a number of commercially and strategic- 
alty important parts of what were formerly regarded as the high seas. 
Should this occur, the U.S. Government could be faced with a diffi- 
cult problem. 

In recent years the U.S. Navy has been reduced in size by about 

500 ships. The reduction was accomplished by disposal, without 

replacement, of World War II vintage ships deemed inadequate for 

combat service in a war against a first class naval power (the Soviet 

Union). Man}^ of these old ships were, however, sufficienth^ capable 

for use in less demanding ''Third World" scenarios and a number were 

sold or otherwise transferred to U.S. client countries in the Third 
World.^8 

Other modern industrialized states, including the Soviet Union, 
have also transferred older, but still capable ships to Third World 
navies. Some of these navies have also acquired modern patrol type 
craft equipped wdth modern weapons. While they would fare poorly 
against the more modern ships of the U.S. Navy, dispersal and num- 
bers of these warships make them a formidable threat to undefended 
commercial or research vessels. Another threat to shipping is the rela- 
tively large number of modern ofl'ensive aircraft available to Third 
World countries which could operate either independently of, or in 
coordination Tv^th their warships. While none of these Third World 
powers could hope to unilaterall}^ challenge the United States in a 
war at sea, a coordinated low mtensity campaign of harassment could 
have adverse impact. 

* * * AVe will be faced with the dilemma of either turning our backs and, in 
effect abandoning our rights or somehow tr3ing to assert them. If we try to assert 
them we are forced into a situation either of creating ill will and the progressive 
hostility on the part of more antl more countries or we are faced with some kind 

1'' Robert E. Osgood, U.S. Security Interests in Ocean Law, in Ocean Development and 
International Law 2. Spring 1974. p. 29. 

18 U.S. Library of Congress, Congressional Research Service, U.S. Navy Shipbuilding 
(IB 77-013), p. 2. 



106 

of show of force which in turn could result in the improvident dispersion of our 
"jiaval capabilities.^ 9 

because of its reduced size, and its emphasis on highly capable ships 
needed to counter the Soviet Navy, the U.S. Navy is deficient in 
numbers of less capable ships necessary for the kind of challenge 
discussed here. The situation is reminiscent of the predicament of the 
Royal Na\^ in World War I after disposal of numerous less capable 
ships before the war as an economy move to enable purchase of a 
fleet of dreadnaughts and battle cruisers. When war came there were 
insufficient numbers of these less capable ships to deal with, the sub- 
marine threat to the Royal Navy's command of the seas.^° 

Whether the U.S. Navy has sufficient capability to assert the right 
of navigational freedoms within the economic zones of dissenting 
coastal states has not been assessed in unclassified sources and is not 
further addressed here. It is a question that should be answered, 
however, as a part of deliberations over whether to license U.S. 
companies to conduct seabed mining explorations or operations in the 
absence of an acceptable international agreement. A related matter is 
the question whether the United States could possibly expect support 
including naval and air support from other maritime powers whose 
interest in navigation freedoms parallels ours. 

Defense Considerations in Legislation Affecting Deep 
Seabed Mining Operations 

Legislation concerning deep seabed mining has been before Congress 
since 1972. Among the reasons such legislation has not been passed to 
date has been the insistence of the executive branch that the unilateral 
passage of deep seabed legislation by the U.S. Congress would jeop- 
ardize the complex law of the sea negotiations. Moreover, until 
recently, deep seabed technology had not advanced to a point where 
there was a sense of urgency to provide legislation to protect U.S. 
mining interests. But these reasons have largely disappeared. 

Since 1973, six sessions of the Third Conference of the Law of the 
Sea have taken place. But the probability of the prompt completion 
of a law of the sea treaty seems to many to be more remote than 
ever before. As the U.S. Ambassador to the Conference, Elliot Rich- 
ardson, pointed out in his public statement on July 20, 1977, those 
aspects of the new informal composite negotiation text (ICNT) deal- 
ing with deep seabed mining are ''now funchmientally unacceptable," 
and the text "substantially sets back prospects for agreement on an 
international regime for the conduct of seabed mining." Moreover, 
upon Ambassador Richardson's recommendation to the President, the 
administration is now in the process of reviewing wliether an agree- 
ment acceptable to all governments can best be achieved tiirough the 
kind of negotiations tliat have taken place to date. And now, the 
executive bi-anch has modified its j)()sition concorning unilateral pas- 
sage of deep seabed legislation, and has indicated that though it does 
not support all aspects of the legislation currentl3^ before Congress, it 
favors passage of some kind of deep seabed mining legislation. 



"♦ Ainh.issjulor Elliot Ia Klohnrdson before the Subconimlttoe on Dompstie and Intor- 
natioiial SclfiitUic IMannliifr, Analysis and C()Oi)oratlon, op. cit., p. 17(>. 

-'•Arthur J. Mardor, From the DroadnnuKht to Scapa Flow, the Hoval Navv In the Fisher 
Kra. 1901-1919. Vol. I. The Koad to War. 1904-1919. London: Oxford University Press, 
19(51. p. 54. 



107 

Between pessimism over the likelihood of the successful iie<j:o(iation 
of a law of the sea treat^^ in the near future and the fact that mining 
interests have now reached a point in the development of their tech- 
nology^ where they are ready to begin i)rototy])e oi)erations in the 
deep seabed, there is a more receptive mood in the 95th Congress to 
pass such legislation than in previous sessions. 

GENERAL THRUST OF MAJOR BILLS 

There are a number of bills concerning deep seabed mining before 
the current Congress. The five most frequently discussed are : 

(1) The ''Deep Seabed Hard Mineral Resources Act" (II.R. 
3350— Breaux/Murphy) ; 

(2) The ''Ocean Mining Incentive Act of 1977" (H.R. 3652— 
Fraser) ; 

(3) The "Deep Seabed Mineral Resources Act" (H.R. 6784— 
McCloske30; 

(4) The "Deep Seabed Mineral Resources Act" (S. 2053— 
^^letcalf) ; 

(5) The "Transitional Deep Ocean Minmg Act" (S. 2085— 
Weicker) ; and 

(6) The Deep Seabed Mineral Resources Act of 1977 (S. 2168— 
Stevens). 

Sponsors justify the legislation on the grounds that it is in the 
national interest of the United States to reduce its reliance on the 
importation of strategic minerals from foreign nations. The general 
purpose and thrust of the bills is to provide interim legislation until 
a law of the sea treaty is completed and enters into force for the 
United States at which time the international agreement would super- 
sede the legislation. In the meantime the legislation would endeavor 
to encourage, regulate the development of, and protect deep seabed 
mining against some risks, while insuring the protection of the 
environment. 

Of the major bills under consideration, H.R. 3350 is the bill on 
which there has been the most movement. It was reported out of the 
House Committee on Merchant Marine and Fisheries (Rept. 95-588, 
part I, August 9, 1977) and was reported, as amended, out of the 
House Committee on Interior and Insular Affairs on October 26, its 
report having been filed November 7 (Rept. 95-588, part 2). In a 
letter of November 1 1 , the Speaker of the House granted sequential re- 
ferral of this bill to the House International Relations Committee, 
including its Subcommittees on International Organization, and on 
International Economic Policies and Trade. 

None of the other bills mentioned earlier have been reported out 
of committee. H.R. 3652 was referred jointty to the Committees on 
Interior and Insular Affairs, International Relations, and ]Merchant 
Marine and Fisheries. On May 17 and 18, the Subcommittee on Inter- 
national Organizations of the Committee on International Relations 
held hearings on H.R. 3652. Hearings have also been held October 4, 
1977 on S. 2053 and S. 2085 b}^ the Committee on Commerce, Science, 
and Technology and the Subcommittee on Public Lands and Re- 
sources of the Committee on Energy and Natural Resources. None 
of these bills have been referred to either of the Ai'med Services Com- 
mittees. 



108 

SECURITY-RELATED PROVISIONS OF BILLS 

As indicated earlier, all of the major bills include provisions intended 
to encourage and protect the deep seabed minins; industry. In doing 
so, their effect would be to regulate the activities of U.S/ citizens on 
the high seas. 

With regard to the question of minimizing international conflict 
over mining operations, however, the bills are generally uneven and 
disparate. While all prohibit U.S. deep seabed mining industries from 
interfering with freedom on the high seas, jeopardizing the rights of 
other nations, or conflicting with any international obligations of the 
United States, and provide for various penalties and enforcement 
actions in case of violations, protection against possible interference 
or hostile acts from foreign states or interests are either minimally 
touched upon or nonexistent. Only one bill includes a provision 
for mihtar\' involvement to protect mining interests. H.R. 6784 
(McCloskey) would provide military escorts to protect mining opera- 
tions. It is not specific, however, concerning under what circum- 
stances such escorts would be brought into play or what theu' responsi- 
bilities should be once they were at the mining site; whether they are 
just to establish a presence or actually to militaril}' defend the site 
upon provocation. 

H.R. 3652 (Fraser) recognizes the possibihty of interference or 
loss through hostile actions against mining operations, but provides 
economic rather than militar}' guarantees to the industry should the 
occasion arise. As part of a proposed incentive program, the bill 
would provide insurance up to $100 million in losses due to sabotage, 
interference, and so forth. 

Dissenting Congressional Views 

Since the legislation under consideration does not give extensive 
consideration to the security implications of deep seabed mining, it is 
not too surprising that the hearings and markup sessions have not 
devoted much attention to this aspect of the problem. 

Among the dissenting and additional views by members of the 
Merchant Marine and Fisheries Committee included in its report on 
H.R. 3350, only one Congressman addressed the matter of mihtary 
security — Paul McCloskey, sponsor of the only bill (H.R. 6784) to 
provide for military escorts to mining sites. As sponsor of a mining 
biU, he is in favor of passage of deep seabed mining legislation. But 
he expressed reservations, not only concerning H.R. 3350, but with 
the manner in which the whole question of legislation is being handled. 

Noting that this is legislation which ventures, ''for the first time, a 
U.S. governmental exercise of statutory jurisdiction over activities 
conducted in specific areas of international waters beyond our Con- 
tinental Shelf and 200-mile limit," he argues that it is a major foreign 
policy initiative which requires clear guidance from the executive 
branch on substantive ])rovisions of the bill which ''can affect the 
chances for world peace for generations." Having noted the fact that 
the executive branch was reviewing its position on deep seabed legis- 
lation and had not been prepared to present testimony on the sub- 
stantive j)rovisions of H.R. 3350 at that time, he thought that without 
such testimony, it seemed "almost incredible that we in Congress 
would push ahead so hastily and rashly in an area of primaiy juris- 
diction of the executive branch rather than ourselves." 



109 

Makin^]: an analogy between the Fisheries Conservation and Man- 
agement Act of 1976 and deep seabed mining, Congressman McCloskey 
cited what he regarded as the consequences of the Fisheries Act. Since 
the passage of that act, he pointed out, there had been numerous 
assertions of similar, or broader jurisdiction over offshore zones by 
coastal states — which he maintained had obtained justification for 
their assertions from the U.S. 200-mile bill. In particular, he cited 
North Korea which had put into effect a 200-mile economic zone with 
broader rights than those asserted by the United States including a 
50-mile military zone. Since international law is established through 
claims, use, and acquiescence, he pointed out, 'Sve are obligated to 
resist their claim to prevent it from ripening into international law." 

Congressman McCloskey warned that if Congress passed deep 
seabed legislation: 

We must not only be prepared to anticipate and defend licensees or permittees 
from interference b}- others (even if the licensee or permittee is a Soviet/ Algerian 
consortium) on the high seas by the use of militar}- force but we must also be 
prepared to resist inconsistent claims by other countries to prevent those claims 
from becoming law. Again, this legislation has significant foreign policy- aspects 
which have not been addressed and which should be given thoughtful consideration 
before we take action. 

Agency Views. 

As in the Congi'ess, there has been little public discussion in general 
among the various agencies concerning the protection of mining oper- 
ations from interference or hostile acts, and of the foreign poHcy 
impUcations such action would entail. 

In commenting October 4, on S. 2053 and S. 2085, Ambassador 
Richardson stated : 

* * * the bills contain provisions that minimize chances for conflict with 
designated reciprocating states engaged in deep seabed mining. They also provide 
for environmental safeguards and the means to assure timely action to avoid and 
avert damage to the ocean biosphere, although in our view, the enforcement 
provisions in S. 205S should be strengthened, * * * 

The Ambassador does not spell out, however, what he means by 
''enforcement." He may be referring to it in a military sense, but more 
likely, what he has in mind has nothing to do with foreign interference 
or sabotage but refers to enforcing the legislation in terms of U.S. 
citizen violations. 

The Department of Defense, which does not believe that there is an 
immediate need for mineral resources from deep seabed mining, does 
not favor passage of any legislation in this area. Moreover, in testi- 
mony before the International Relations Committee July 25, 1977, 
Assistant Secretary of Defense David E. McGiffert stated that "for 
stockpiling purposes, the deep seabed resource would be too subject 
to interdiction to be relied on." 

The Government Accounting Office, in a report addressed to Chair- 
man Murphy of the Committee on Merchant Marine and Fisheries, 
outlined a number of reasons for opposing the enactment of both 
H.R. 3350 and H.R. 3652. Failure to include any provisions concern- 
ing security threats to mining operations was not one of them. It did 
cite as one of the deficiencies of the bills, the failure to provide for 
"general foreign polic}^" 

With regard to section 22(b) of H.R. 3350, which provides that any 
license or similar legal entitlement issued by a reciprocating state 
shall be recognized by the United States as though it were issued by 

20-211—78 9 



no 

the Secretary of Commerce, GAO said that ''Presumably, arrange- 
ments woukl be made with reciprocating states to recognize each 
others' rights in order to avoid any conflicts as to licenses granted." 
It believed, however, that there "should be mention of the device 
for resolving potential conflicts should consortia members from other 
countries apply for licenses from their own states for tracts already 
licensed by the United States." 

Defense-Related Questions for Future Deliberations 

Several defense-related questions which might be investigated in 
future deliberations concerning deep seabed mining legislation may 
be drawn from the discussion presented in this chapter. Since the 
})assage of legislation permitting unilateral licensing of deep seabed 
mining related activities would open the issues involved to the action/ 
reaction process by which customary international law is developed, 
inquiry might fruitfully focus on our ability to respond to challenges 
to our claimed right to authorize U.S. mining companies to conduct 
operations. Deterrence of hostile action against U.S. maritime oper- 
ations in general and seabed mining operations in particular depends 
on the perceptions of other nations and subnational groups of U.S. 
capability and willingness to meet such challenges effectively. Open 
hearings on the question would have the attention of those vitally 
interested in indicators of congressional intent and resolve in this 
matter. 

The feasibility of arming mining vessels to enable self-defense 
against threats presented by subnational groups or Third World 
countries possessing minimal naval capabilities could be explored. The 
consequences of adding a significant effort to protect deep seabed 
mining operations, and possibly other U.S. maritime operations, to 
the Navy's other peacetime requirements also need to be better 
defined. And the limits, if any, on the use of the Navy's resources for 
these purposes need to be determined. 

In larger context, the effect that the kinds of confrontations that 
could result from the action/reaction process over deep seabed mining 
operations or navigation rights might have on the collective security 
system that has been the basis of U.S. national security planning ami 
strategy for the past 30 years should be evaluated. What countries 
are likely to be alienated? Britain was persuaded to back off from 
asserting her claims to high seas fishing rights in her cod war with 
Iceland in ])art because of national security considerations related 
to NATO solidarity. Should considerations of this kind have a bearing 
on the decision to license operations related to mining the deep seabed? 

This chapter has not held that national security considerations 
should dominate discussions of the deep seabed mining issue. Its 
thesis is, simply, that national security considerations have a bearing 
on the decision and ouglit not to be ignored. Examination of the 
])ublic record of the debate on legishition concerning deep seabed 
mining reveals only minimal reference to these consi(l(MM lions. A more 
comi)rehensive inquiry would appear prudent. 



VII. TRENDS AND PROJECTIONS FOR DEEP SEABED 

MINING 

Effect on Supply and Demand 

Any attempt to project the market impact of deep seabed mining 
commencing 10 years or more in the future would necessitate making 
numerous assumptions. Based on a given set of assumptions, tentative 
projections can still be wide of the mark because of unanticipated 
economic factors or for reasons other than economic. In any event, 
projections of market impacts have been attempted for two sets of 
conditions: seabed mining commencing in 1985 and seabed mining 
commencing in 1990. Because commercial deep seabed mining does not 
yet exist, and equipment testing and prototype operations are not 
yet complete, the figures used in these projections are hypothetical. 
Consequently, the average content of the metals in the nodule deposits 
(which will vary from deposit to deposit), processing efficiency, timing 
of entry into commercial operation, schedule of second- and third- 
generation minesite development, and growth of demand in the 
various metals markets are based on judgments and cannot be pre- 
cisely derived. 

With these caveats in mind, the following assumptions are made 
concerning production from the deep seabed and world market 
conditions : 

(1) Each minesite or nodule deposit would have the following 
average percentage composition: Manganese, 28; nickel, 1.25; copper, 
1.1; and cobalt, 0.25. 

(2) A single operation would produce 3 million metric tons (dr^^ 
weight) of nodules per year. However, for manganese, only 3 to 4 
million metric tons of nodules total would be processed annually by 
the year 2000. 

(3) Metallurgical processing efficiency would be 95 percent. 

(4) Through the year 2000 world demand would increase at an 
average arjiual rate percentagewise as follows: Nickel, 4; copper, 4: 
cobalt, 3.5; and manganese, 3. 

In addition to the above considerations, some further assumptions 
are necessary. Because of the highly capital-intensive nature of deep 
seabed mining operations ($500 million to $700 million per minesite) 
and the generally tight picture for availability of large amounts of 
speculative capital through the next two decades, it is not expected 
that any consortia would rapidly expand beyond one minesite until 
that site is well along toward proving its economic viability and 
reducing its indebtedness. For this reason, and based on the assump- 
tion developed elsewhere that the rate of return on investment will 
be in the range of 13 to 23 percent,^ it is assumed that each consortia 
would develop additional minesites at roughly 5-year intervals through 
the year 2000. 



1 Wri£:ht. Rebecca L., "Ocean Mining, An Economic Evaluation," Ocean Mining Admin- 
istration, U.S. Department of tlie Interior, May 1976, 18 pp. 

(Ill) 



112 

It is further assumed that there will be five separate mining interests 
that will initially proceed to commercial seabed mining. For convenience 
it is hypothesized that the initial five interests will begin operations 
at the rate of one each jeixT for the first 5 years. It is also assumed that 
a sixth interest will enter into operation before the year 2000. 

In order to develop market impacts, it is also necessary to assume 
that no provisions of a future Law of the Sea Treaty will affect mar- 
keting conditions (such as production controls, etc.) or the develop- 
ment of minesites. Since it cannot be predicted what development, 
or market restrictions a possible treaty may contain, for the purposes 
of this discussion, a condition of status quo is assumed. In like manner, 
it is assumed that any mining enterprise structured from a treaty 
agreement would operate under the same market conditions as any 
other mining venture. 

Based on these assumptions, the annual metal recovery, in metric 
tons, from a minesite producing 3 million metric tons (dry weight) 
of nodules per year would be as follows: Nickel, 36,000; copper, 31,000; 
and cobalt, 7,000. These quantities of nickel, copper, and cobalt have 
been used to develop the seabed production figures in the tables that 
follow. In the case of manganese, a net recovery of 250,000 metric 
tons (metal content) from 1 million tons of nodules is assumed. 
Three to four operations recovering this amount of manganese have 
been arbitrarily inserted in the minesite development schedules that 
follow. 

TABLE VII-1.— HYPOTHETICAL SCHEDULE OF MINESITE DEVELOPMENT BEGINNING IN 1985 

Sites Cumulative 

developed sites 

Year each year developed 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 



CASE i: SEABED .AIINING COMMENCING IN 1985 

This scenario is based on the ])rosumption that seabed mining will 
begin in 1985. According to the assumptions stated above, the de- 
velopment schedule would be roughly as given in table VII-1. This 
schedule assumes five se{)arate mining interests starting operations at 
the rate of one a year for the first 5 years. The sequence is repeated 
as second and third minesites are developed. A sixth interest enters 
into operation in the \'ear 1098 and a cumulative total of 17 minesites 
are under development by the year 2000. It should be noted that this 
sche(hile is no more than an estimate developed from the j)articular 
assurnj)ti()ns made, and market su|)ply results derived from it can be 
no more j)recise than these assumptions. 




































































113 



In order to develop projections, estunated 197G primary production 
(metal content) is used as a reference base. For the four metals con- 
sidered, the estimated 1976 base figures in metric tons are: nickel, 
790,000; copper, 7,300,000; cobalt, 35,000; and inan^ranese, 10,800,000. 
Calculating on the basis of the annual demand growth rates stated 
previously, the market impacts from seabed j)ro(hiction have been de- 
termined for each metal (tables VII-2 through VlII-5). 



TABLE VII-2. 



-PROJECTED PRIMARY NICKEL DEMAND AMD HYPOTHETICAL SEABED NICKEL 
PRODUCTION BEGINNING IN 1985 

[In thousands of metric tons] 











Annual 








Annual 


Annual 


increase in 






Annual 


increase in 


seabed 


seabed 




Year 


demand 


demand 


production 


production 


Percent' 



1985. 
1986. 
1987. 
1988. 
1989. 
1990. 
1991. 
1992. 
1993. 
1994. 
1995. 
1996. 
1997. 
1998. 
1999. 
2000. 



1.124 


45 


36 


36 


80 


1,169 


47 


72 


36 


77 


1,216 


49 


108 


36 


73 


1,265 


51 


144 


36 


71 


1,315 


53 


180 


36 


68 


1.368 


55 


216 


36 


65 


1,423 


57 


252 


36 


63 


1,480 


59 


288 


36 


61 


1,539 


62 


324 


36 


58 


1,600 


64 


360 


36 


56 


1,664 


67 


396 


36 


54 


1,731 


69 


432 


36 


52 


1,800 


72 


468 


36 


50 


1,872 


75 


540 


72 


% 


1,947 


78 


576 


36 


46 


2,025 


81 


612 


36 


44 



1 Annual increase in demand supplied from annual increase in seabed production. 

Note.— Cumulative demand, 1985-2000: 24,540,000; cumulative seabed production 1985-2000: 5,004.000; and percent 
of cumulative demand supplied from seabed production, 1985-2000: 20. 

TABLE VII-3.— PROJECTED PRIMARY COPPER DEMAND AMD HYPOTHETICAL SEABED COPPER 
PRODUCTION BEGINNING IN 1985 



[In thousands of metric tons] 











Annual 








Annual 


Annual 


increase in 






Annual 


increase in 


seabed 


seabed 




Year 


demand 


demand 


production 


production 


Percent • 



1985.. 
1986. 
1987. 
1988. 
1989. 
1990. 
1991. 
1992. 
1993. 
1994. 
1995. 
1996. 
1997. 
1998. 
1999. 
2000. 



10,390 


416 


31 


31 


7 


10, 806 


432 


62 


31 


7 


11,238 


450 


93 


31 


7 


11,688 


468 


124 


31 


7 


12,155 


486 


155 


31 


6 


12,641 


506 


186 


31 


6 


13,147 


526 


217 


31 


6 


13,673 


547 


248 


31 


6 


14, 220 


569 


279 


31 


5 


14,789 


592 


310 


31 


5 


15, 380 


615 


341 


31 


5 


15,995 


640 


372 


31 


5 


16, 635 


665 


403 


31 


5 


17, 300 


692 


465 


62 


9 


17,992 


720 


496 


31 


4 


18,712 


748 


527 


31 


4 



1 Annual increase in demand supplied from annual increase in seabed production. 

Note.— Cumulative demand, 1985-2000: 226,762,000; cumulative seabed production, 1985-2C00: 4,3C9,0G0; and percent 
of cumulative demand supplied from seabed production, 1985-2000: 2. 



114 



TABLE VII-4— PROJECTED PRIMARY COBALT DEMAND AND HYPOTHETICAL SEABED COBALT PRODUCTION 

BEGINNING IN 1985 



[in thousands of metric tons] 



Year 



Annual 
demand 



Annual 

increase 

in demand 



Annual 

seabed 

production 



Annual 

increases 

in seabed 

production 



Percent' 



1985. 
1986. 
1987. 
1988. 
1989. 
1990. 
1991. 
1992. 
1993. 
1994. 
1995. 
1996. 
1997. 
1998. 
1999. 
2000. 



48 


1.7 


7 




412 


50 


1.7 


14 




412 


51 


1.8 


21 




389 


53 


1.9 


28 




368 


55 


1.9 


35 




368 


57 


2.0 


42 




350 


59 


2.1 


49 




333 


61 


2.1 


56 




333 


63 


2.2 


63 




318 


65 


2.3 


70 




304 


68 


2.4 


77 




292 


70 


2.4 


84 




292 


72 


2.5 


91 




280 


75 


2.6 


105 


14 


538 


77 


2.7 


112 




259 


80 


2.8 


119 




250 



1 Annual increase in demand supplied from annual increase in seabed production. 

Note.— Cumulative demand, 1985-2000: 1,003,000; cumulative seabed production, 1985-2000: 973,000; and percent 
of cumulative demand supplied from seabed production, 1985-2000: 97. 

Table VII-2 is an attempt to place seabed production of nickel 
beginning in 1985 in the perspective of projected world demand 
through the year 2000. It can be seen from this table that one seabed 
mining operation of 3 million metric tons per year coming on stream 
in 1985 could supply 80 percent of the increase in dem.and for nickel in 
that 3'ear, and 3.2 percent of the total demand. If additional seabed 
minesites were developed at the rate of roughly one a 3^ear, the percent 
of annual increase in demand supplied by the annual increase in seabed 
production would drop to 44 percent by the year 2000. Cumulative 
seabed production phased in according to this hypothetical schedule 
would supply 20 percent of the cumulative nickel demand for the 
period 1985-2000 and would supply an even smaller fraction of the 
cumulative demand be^'ond the 3'ear 2000 if seabed minesites were 
developed at the rate of one per year, and growth in demand continues 
at the projected rate of 4 percent annually. 

Table VII-3 is a projection of the primary copper demand and 
seabed copper production through the 3'ear 2000 according to the 
same development schedule. In the copper market, world demand is 
relatively large compared to projected seabed prochiction. (Conse- 
quently, at an annual growth in copper demand of 4 j^ercent, the iirst 
seabed mining operation in 1985 would provide only 7 ])erccnt of the 
increased requirement for co})per in that year. By the year 2000 
projected seabed mining operations would be suj)piying only 4 per- 
cent of the increased demand if seabed mining proceeds according to 
the schedule in table VII-1. The cumulative demand for primary 
copper through the period 1985-2000 would exceed a quarter of a 
billion metric tons of which seabed mining would sui)i)ly about 2 
])ercont. 



115 

Cobalt demand and seabed production are projected throui^h the 
year 2000 in table VI 1-4. Contrary to the case of copper the demand 
lor cobalt is relatively small compared to [)ossible recovery from 
seabed mining oj)erations. If all the cobalt that could be produced by 
one mining operation in 1985 were marketed, it would supj)ly a little 
over four times the projected increase in demand in that year. Jf this 
were the case, land-based ])roduction would have to be cut back. 
However, seabed production from 3 million tons of nodules in 1985, 
yielding 7,000 metric tons of cobalt, would su])ply about 15 i)ercent 
of the projected demand for primary cobalt in that year. Cumulative 
demand for primary cobalt during the period 1985-2000 is j)rojected 
to be just over 1 million metric tons of which seabed production from 
17 minesites phased in according to the schedule in table VII- 1 could 
supply 97 percent. Marketing conditions would obviously be altered 
if such a relatively high level of seabed cobalt production were to 
develop. Changes in the market would likely include increased demand 
from more widespread use of cobalt spurred by lower prices or reduced 
supply by not producing cobalt from all nodule minesites. 

Projections for manganese demand and seabed recovery are included 
in table VII-5. The projection for seabed manganese is somewhat 
more subjective than the other metals because to date only one con- 
sortium has announced its intention to recover and market manganese 
from seabed nodules. Furthermore, based on recovery of four metals, 
this consortium intends to mine roughly one million metric tons of 
nodules per year per mine site. Consequenth', in this scenario, a pro- 
duction of 250,000 metric tons of manganese is assumed, beginning in 
1985 and increasing in four equal increments to 1 million metric tons 
by the 3'ear 2000. This could supply nearh' 60 percent of the increase 
in demand for manganese in the year 1985 and about 3 percent of the 
cumulative demand during the period 1985-2000. 

CASE 11: SEABED MINING CO:\rMENCING IN 1990 

In this senario, it is assumed that production from the first seabed 
minesite will enter the m.arket in 1990 and that additional minesites 
w411 be developed roughty as projected in table VII-6. This develop- 
ment schedule projects increased seabed production at the rate of one 
new site of 3 million metric tons per year through 1999 and two sites 
brought into production in the year 2000. This hypothetical schedule 
would result in the development of 12 sites by the year 2000. 

Demand for primary nickel and seabed nickel production are pro- 
jected together in table VII-7. The table indicates that 65 percent of 
the increase in nickel demand in 1990 could be satisfied from seabed 
production beginning in that 3^ear. By the year 2000 the development 
of two additional minesites per year would not be able to satisfy the 
projected annual increase in demand. Cumulative primaiy nickel 
dem^and for the period 1990-2000 is estimated at just under 18.5 
million metric tons of w^hich 13 percent could be satisfied from seabed 
production, according to the minesite development schedule used. 



116 



TABLE VII-5.— PROJECTED PRIMARY MANGANESE DEMAND AMD HYPOTHETICAL SEABED MANGANESE 
PRODUCTION BEGINNING IN 1985 

[In thousands of metric tons] 











Annual 








Annual 


Annual 


increase in 






Annual 


increase in 


seabed 


seabed 




Year 


demand 


demand 


production 


production 


Percent' 


1985 


14,093 


423 


250 


250 


59 


1986 


14.516 


435 


250 








1987 


14,951 


449 


250 








1988 


15,400 


462 


250 








1989 


15.862 


476 


250 








1990 


16.338 


490 


500 


250 


51 


1991 


16,828 


505 


500 








1992 


17.333 


520 


500 








1993 


17,853 


536 


500 








1994 


18,389 


552 


500 








1995 _ 


18,941 


568 


750 


250 


44 


1996 


19,509 


585 


750 








1997 


20,094 


603 


750 








1998 


20,697 


621 


750 








1999 


21,318 


640 


750 








2000 


21,958 


659 


1.000 


250 


38 









1 Annual increase in demand supplied from annual increase in seabed production. 

Note— Cumulative demand 1985-2000: 284.080; cumulative seabed production 1985-2000: 8,500; percent of cumulative 
demand supplied from seabed production 1985-2000: 3. 

TABLE VII-6.-HYP0THETICAL SCHEDULE OF MINESITE DEVELOPMENT BEGINNING IN 1990 



Year 


Sites developed 
each year 


Cumulative sites 
developed 


1990 






1991.. 






1992 






1993 






1994 






1995 






1996 






1997 






1998 






1999 




10 


2000 




12 









TABLE VI I -7— PROJECTED PRIMARY NICKEL DEMAND AND HYPOTHETICAL SEABED NICKEL 
PRODUCTION BEGINNING IN 1990 

[In thousands of metric tons] 



Year 









Annual 






Annual 


Annual 


increase in 




Annual 


increase in 


seabed 


seabed 




demand 


demand 


production 


production 


Percent' 


1.368 


55 


36 


36 


65 


1,423 


57 


72 


36 


63 


1.480 


59 


108 


36 


61 


1,539 


62 


144 


36 


58 


1.600 


64 


180 


36 


56 


1,664 


67 


216 


36 


54 


1,731 


69 


252 


36 


52 


1.800 


72 


288 


36 


50 


1.872 


75 


324 


36 


48 


1,947 


78 


360 


36 


46 


2,025 


81 


432 


72 


89 



1990. 
1991. 
1992. 
1993. 
1994. 
1995. 
1996. 
1997. 
1998. 
1999. 
2000. 



I Annual increase in demand supplied from annual increase in seabed production. 

Note.— CumuUive demand 1990-2000: 18,449; cumulative seabed production 1990-2000: 2,412; percent of cumulative 



demand supplied from seabed production 1990-2000: 13. 



Table VJI-S ])la('.os seabed j)ro(hi(;lion of copi^er in the perspective 
of projected world demand for the period 1990-2000. Assuming an 



117 



initial seabed production of 31,000 metric tons of copper in 1990, this 
would satisfy approximately 6 percent of the new supplies of copper 
needed in that year. Cumulative demand for copper is estimated at 
over 170 million metric tons for the period 1990-2000. (cumulative 
seabed production during the same period could supply appi-oximately 
2 million metric tons or a little over 1 percent of the total copper 
required. 

TABLE VII-8.— PROJECTED PRIMARY COPPER DEMAND AND HYPOTHETICAL SEABED COPPER 
PRODUCTION BEGINNING IN 1990 

[In thousands of metric tons] 











Annual 








Annual 


Annual 


increase in 






Annual 


increase in 


seabed 


seabed 




Year 


demand 


demand 


production 


production 


Percent! 



1990. 
1991. 
1992. 
1993. 
1994. 
1995. 
1996. 
1997. 
1998. 
1999. 
2000. 



12,641 


506 


31 


31 


6 


13, 147 


526 


62 


31 


6 


13,673 


547 


93 


31 




14,220 


569 


124 


31 




14,789 


592 


155 


31 




15, 380 


615 


186 


31 




15,995 


640 


217 


31 




16,635 


665 


248 


31 




17, 300 


692 


279 


31 




17,992 


720 


310 


31 




18,712 


748 


372 


62 





1 Annual increase in demand supplied from annual increase in seabed production. 

Note— Cumulative demand 1990-2000: 170,485; cumulative seabed production 1990-2000: 2,077; percent of cumu- 
lative demand supplied from seabed production 1990-2000: 1. 

Projections of cobalt demand and seabed production for the period 
1990-2000 are given in table VII-9. A single minesite recovering 7,000 
metric tons of cobalt would produce 3.5 times the new supply of cobalt 
required in 1990 or about 12 percent of the total demand for that year. 
If seabed mining were to proceed according to the development sched- 
ule in table VII-6, and all the cobalt were marketed, approximately 
63 percent of the cumulative demand during the period 1990-2000 
could be supplied from the cumulative seabed cobalt production. In 
this case, as in the scenario beginning in 1985, the impact on the co- 
balt market from seabed production would be significant. 

TABLE VI li-9.— PROJECTED PRIMARY COBALT DEMAND AND HYPOTHETICAL SEABED COBALT PRODUCTION 

BEGINNING IN 1990 

[In thousands of metric tons] 











Annual 








Annual 


Annual 


increase m 






Annual 


increase in 


seabed 


seabed 




Year 


demand 


demand 


production 


production 


Percent » 



1990. 
1991. 
1992. 
1993. 
1994. 
1995. 
1996. 
1997. 
1998. 
1999. 
2000. 



57 


2.0 


7 




350 


59 


2.1 


14 




333 


61 


2.1 


21 




333 


63 


2.2 


28 




318 


65 


2.3 


35 




304 


68 


2.4 


42 




292 


70 


2.4 


49 




292 


72 


2.5 


56 




280 


75 


2.6 


63 




269 


77 


2.7 


70 




259 


80 


2.8 


84 


14 


500 



1 Annual increase in demand supplied from annua! increase in seabed production. 

Note. — Cumulative demand 1990-2000: 747; Cumulative seabed production 1900-2000: 469; Percent ot 
cumulative demand supplied from seabed production 1990-2000: 63. 



118 

Manganese demand and h}q5othetical seabed production beginning 
in 1990 are compared in table VII-10. An initial production of 250,000 
metric tons of manganese from the seabed could supply half the in- 
crease in demand in 1990. By the year 2000, the annual increase in 
manganese demand would reach close to 660,000 metric tons of which 
an additional seabed minesite producing 250,000 metric tons of man- 
ganese could supply only 38 percent. The cumulative manganese 
demand for the period 1990-2000 is projected to be in excess of 200 
million metric tons compared to the projected cumulative seabed 
production of 4.5 million metric tons. This would indicate that roughly 
2 percent of the cumulative demand would be satisfied from seabed 
production unless other seabed mining ventures become interested in 
recovering manganese. 

TABLE VII-10.— PROJECTED PRIMARY MANGANESE DEMAND AND HYPOTHETICAL SEABED MANGANCSE 
PRODUCTION BEGINNING IN 1S90 

[In thousands of metric tons] 

Annual 
Annual Annual increase in 

Annual increase in seabed seabed 

Year demand demand production production Percent i 

1990 16,338 490 250 

1991 16.828 505 250 

1992 17,333 520 250 

1993 17.853 536 250 

1994 18,389 552 250 

1995 18,941 568 500 

1996 19,509 585 500 

1997.... 20,094 603 500 

1998 20,697 621 500 

1999 21,318 640 500 

2000 21,958 659 750 

• Annual increase in demand supplied from annual increase in seabed production. 

Note.— Cumulative demand, 1990-2000: 209,258,000; cumulative seabed production, 1990-2000: 
of cumulative demand supplied from seabed production, 1990-2000: 2. 

M.4RKET Trends 

SEABED .AIIXIXG COMMENCING IN 1985 

Assuming no ])olitical or other constraints inlluonce the marketing 
of metals derived from deep seabed nodule deposits, some tentative 
projections of the impact on the various metals markets can be made. 
In the case of nickel with commercial recovery beginning in 1985 
and developing according to the hypothetical schechile in the ])revious 
section, the annual seabed production in the year 2000 would total 
612,000 metric tons. Calculated on the basis of 1976 nickel j)rices of 
$2.30 per pound this would amount to a gross value of $3.1 bilHon. 
Based on the projected demand this would represent 30 ])ercent of 
the gross value of the nickel i)ro(luced in the year 2000. The annual 
increases in seabed nickel jiroduction, even with relatively optimistic 
projections of production levels, would not fully satisfv the annual 
increases in demand. This would mean that continued e.xpansion of 
production from land-based deposits would still be needed. The net 
effect of this level of seabed nickel su[)|)ly on the world market would 
be to slow e.xpansion of production from higher cost land-based mines, 
but would have relatively little ei\eet on the lower cost land-based 
mines. This would lead to a leveling in the cost of nickel production. 



250 


51 


























250 


44 


























250 


38 


,500,000; 


and percent 



119 

Nickel pricing:, however, would be lar<2:ely tied to the cost and avail- 
ability of substitutes and possible alternate supply arran<2:ei!ients 
(that is, economic stockpiles, commodity af^reements, and so forth). 

According to the same ])r()jections copper pnxhiction from seabed 
nodules would total 527,000 metric tons in the year 2000. At a typi(;al 
1976 price of $0.64 j)er jjound this wouhl amount to a total p^ross value 
of $740 million and represent 2.8 ])ercent of the projected annual 
production. The market impact from this level of copper production 
from seabed nodules v/ould hardly be noticeable. The small market 
impact that would occur would mostly be felt by the highest cost 
producers such as those in the United States. 

Seabed cobalt production in the year 2000 could theoretically 
reach 119,000 metric tons if mining commenced in 1985 and expanded 
in accordance with the projections made. However, since this level 
of production w^ould greatly exceed the projected world demand, it 
is highly unlikely that this amount of cobalt would actually be 
])roduced from the nodules and marketed. While the market impact 
w^ould be significant, it is difficult to predict its exact nature. Since 
both land-based and seabed-based cobalt production are b3^products 
of the recover}'- of other metals (and consequenth^ have zero acquisi- 
tion cost), the onh^ cost involved, in an economic sense, would be the 
cost of winning the metal. However, in this case social and political 
considerations would very likelj^ override economic considerations in 
marketing the metal. The price structure of the cobalt market would 
be altered downward if not otherwise interferred with. Wliile a 
reduced price for cobalt would hurt a few cobalt exporting countries, 
it would benefit the world economy in general. Consequent^, in view 
of these uncertainties, a calculation of the value of the cobalt re- 
covered from seabed mining in the year 2000 would be virtually 
meaningless. The projected world demand for cobalt in the year 2000 
(which could be entirely satisfied from seabed production) would be 
valued at $800 million at 1976 prices of $4.50 per pound. 

Hypothetical projections of seabed manganese production in the 
year 2000 would total 1 million metric tons. If the manganese product 
from seabed nodules were comparable to metallurgical ore at a repre- 
sentative 1976 price of $1.40 per long ton unit (22.4 pounds of con- 
tained manganese), the gross value would total $140 million. However, 
the costs of recovering a purified form of manganese from seabed 
nodules would likeh'- require and the processing allow the product to 
compete in higher priced manganese markets such as ferromanganese 
or silicomanganese. This would suggest a gross value more in the 
range of $500 million or more. The justification for this assumption is 
that if the manganese product were marketable at a cost competitive 
with metallurgical ore, there would likely be more widespread interest 
among the ocean mining firms for recovering manganese from nodules. 
On the other hand, the highest priced manganese market, for pure 
metal, is relatively small and would readily be saturated if this were 
the only product envisioned. 

Assuming the total demand for cobalt is satisfied from seabed pro- 
duction, if seabed mining were to commence in 1985 and expand to 17 
minesites in the first 15 years, the projected gross value of the metals 
recovered from seabed nodules could total $5.1 billion per year by the 
year 2000 in terms of 1976 prices with no projected inflation. If no 



120 

cobalt were marketed, the metal values would total $4.3 billion per 
year. These totals could be higher depending on the degree to which 
the value of the manganese product is enhanced. For nickel, copper, 
and manganese, this would not be a major disruptive influence on the 
world metals markets, because the projected annual increase in 
demand would exceed the annual increase in seabed production. In 
the case of cobalt the reverse is true and the entire price structure of 
the cobalt market would likely be changed and factors other than 
economic considerations could be expected to have some influence. 

SEABED MINING COMMENCING IN 1990 

According to the projected schedule of seabed minesite development 
beginning in 1990 detailed in table VII-6, nickel production from deep 
seabed sources could reach 432,000 metric tons by the year 2000. At 
1976 prices this would amount to a gross value of $2.2 billion and 
would satisfy 21 percent of the world demand projected for the year 
2000. Assuming that two minesites come onstream in the year 2000 
their new output would still be less than the increase in primary nickel 
production needed to satisfy the projected demand. This would 
indicate that beyond the year 2000 deep seabed mining could expand 
at a rate of two sites per year (a rate greater than considered likely 
based on financial considerations, phj^sical constraints, and so forth.) 
and the output would still be completely absorbed b}^ the increase in 
demand in the nickel market. The projected levels of deep seabed 
nickel production beginning in 1990 would be unlikel}^ to have any 
direct major influence on market prices. Land-based nickel production 
would continue to dominate the market well be3^ond the year 2000. 

Copper production from deep seabed nodules could be expected to 
total 372,000 metric tons by the year 2000 assuming production begins 
in 1990. In 1976 prices the gross value of this copper output would 
total about $500 million. In terms of projected world demand in the 
year 2000, this would represent about 2 percent. The overall market 
impact from this level of copper production would be negligible. 

In the case of cobalt, b^^ the year 2000 seabed pioduction could 
reach a level equal to the entire world demand. Obviously this would 
have a severe impact on the cobalt market and it is likely that this 
amount of cobalt would not be recovered from the mined nodules even 
though it would be available for only the cost of processing. In general 
the same considerations would apply as discussed in the previous 
scenario. 

Projections of manganese production from seabed nodules could 
total 750,000 metric tons (manganese content) if seabed mining began 
in 1990. As discussed in the case of seabed mining beginning in 1985, 
the market value of this ])roduct would depend on the extent to which 
it was refined for use in steelmaking. The value of this tonnage is 
assumed to fall in the range of $400 million to $500 million in manga- 
nese materials that would not have a major impact on the market for 
metallurgical ore. 

In summary, with seabed mining commencing in 1990 and based on 

1976 piices, the combined value of seabed metals produced in the year 

2000 would fall in the range of $3.1 billion to $3.9 billion, with an 

average of $3.5 billion, depending to a large extent on tlie cobalt 

market. Tliis can be compared to an average gross value of $4.7 



121 

billion by the year 2000 if seabed mininfi; commenced in 1985. In 
either case the manganese, nickel and copper markets would not sufTer 
a severe impact, but it is unlikely that the present value of cobalt 
would prevail. 

U.S. Market Trends and Economic Benefits 

Based on 1976 data U.S. imports of nickel, copper, cobalt, and 
manganese totaled $1,847 million and exports of these commodities 
totaled $302 million for a net deficit in these metals of over $1.5 
billion. The individual net import value of these commodities is 
reported as follows: nickel, $761 million; copper, $479 million; cobalt, 
$65 million; and manganese, $240 million.^ 

Using U.S. Bureau of Mines projections of annual growth rates in 
domestic demand and projected levels of domestic production pre- 
sented in chapter III, the projected levels of U.S. imports of copper, 
cobalt, nickel, and manganese can be derived for the year 2000 
(table VII-II). The projections used for U.S. primary production 
levels in table VII-II are based on extrapolations of 20-year trends 
taken from tables III-3, III-7, III-ll, and III-15. 

TABLE Vll-n. -PROJECTED U.S. DEMAND, PRODUCTION, AND IMPORTS IN THE YEAR 2000 FOR METALS FROM 

SEABED NODULES 





(In thousands of short tons] 






Metal 


U.S. primary 
demand 


U.S. produc- 
tion based on 
20-year trend 


U.S. imports 


Nickel 


385 


32.6 

2,700 






352 


Copper 


4, 200 


1,500 


Cobalt 


43 


43 


Manganese 


_ 2, 130 


2,130 









From the projections in table VII-11 it is apparent that the United 
States will continue to be heavily dependent on imports for the metals 
in seabed nodules in the year 2000 if present trends continue without 
seabed production. However, in order to assess the possible impact of 
seabed mining on the United States, the extent of involvement of 
U.S. firms in ocean mining consortia in the year 2000 would have to 
be estimated. 

Based on the current level of participation of U.S. firms and as- 
suming that most new entries will likely be foreign based or an inter- 
national enterprise, the level of U.S. -owned interests in ocean mining 
consortia in the year 2000 is estimated at roughly 35 percent. Since 
seabed nodule production by U.S. firms would presumably be con- 
sidered equivalent to domestic primary production, the amounts of 
each of the four metals that may be derived from seabed mining by 
U.S. firms can be estimated in terms of domestic production. These 
estimates are given in table VII-12 where seabed production by U.S. 
interests is shown to reduce U.S. imports in these metals. 

- U.S. Congress, House, Committee on Merchant Marine and Fisheries, Subcommittee on 
Oceanography. Hearings. 95th Cong., 1st sess., Mar. 17. 18 ; Apr. 19, 26, 27 ; May 11 and 20. 
1977, U.S. Government Printing Office, Washington, D.C., 1977, p. 500. 



352 


236 


115 


1,500 


204 


1.296 


43 


46 


13 


2,130 


385 


1.745 


$4.2 


$1.8 


$2.4 



122 

TABLE Vll-12.— REDUCTION OF U.S. IMPORTS IN 2000 FROM SEABED MINING COMMENCING IN 1985 
[Units in thousands of short tons) 

U.S. imports Seabed Imports with 

no seabed production seabed 

Metal minmg by U.S. firms production 

Nrkel 

Copper 

Cobalt--.. 

Manganese 

Estimated value (billions)... 

1 Export. 

Assigninfr dollar values (in terms of 1976 dollars and prices with no 
allowance for inflation) to these estimates, U.S. imports of copper, 
nickel, cobalt, and manganese would total $4.2 billion without seabed 
mining, and would total $2.4 billion with seabed mininc:, in the year 
2000. The difference would be a reduction in the U.S. balance of pay- 
ments of $1.8 billion per year in the jesiV 2000 if seabed mining began 
in 1985 according to the assumptions stated. 

The same considerations are used to develop table VII-13 for the 
case of seabed mining commencing in 1990. In this case there is less 
of a reduction in imports as fewer seabed minesites would be developed 
by the year 2000. 

TABLE VII-13.— REDUCTION OF U.S. IMPORTS IN 2000 FROM SEABED MINING COMMENCING IN 1990 
(Units in thousands of short tons] 

Seabed 

U.S. imports production Importswith 

no seabed by U.S. seabed 

Metal mining interests production 

Nickel 

Copper 

Cobalt - 

Manganese 

Estimated value (billions) 

Assigning the same dollar values to the tonnage estimates in table 
VIII-13 yields the following totals for nickel, copper, manganese, and 
cobalt: Imports without seabed mining, $4.2 billion; imports with sea- 
bed production, $2.9 billion; difference or equivalent of additional 
domestic production, $1.3 billion. Comparing the dollar totals for the 
reduction in pajTuents for imports in the year 2000, it can be seen that 
the gross effect on the U.S. economy in terms of market im])acts from 
seabed mining beginning in 1990 versus 1985, would amount to a 
difference of $0.5 billion per year by the year 2000. Allowing for the 
possibility that these assum])tions could be off by as much as a factor 
of two in either direction, this difference could be ex])ressed as ranging 
between $,'^ and $1 billion per year by the year 2000. This represents 
the estimated saving to the United States for imported materials if 
seabed mining commenced in 1985 rather than 1990 and developed 
according to the assumptions stated. Conversely, this could be re- 
garded as a rougli estinuite of the yearly cost to the United States 
over the long term if seabed mining were to be delayed 5 years until 
1990 instead of its bemnnimr in 1985. 



352 


166 


186 


1,500 


H3 


1,357 


43 


32 


11 


2,130 


290 


1,840 


$4.2 


$1.3 


$2.9 



123 

A final caveat is in order. These estimates in 1970 dollars are specu- 
lative at best and do not consider chanpn": world prices for raw 
materials (likely to continue to increase over the lonjj term) and other 
economic factors such as ripj)le effects in the U.S. econonu' from em- 
ploA^ment in, and production related to, a future seabed mining: indus- 
try. Furthermore, these estimates depend on a hypothetical schedule of 
seabed minesite development based largely on assumi)tions of the 
future availabihty of risk capital and possible rate of return on in- 
vestment in deep seabed mining. No consideration is given in this dis- 
cussion to the cost of developing alternative land-based deposits. Any 
one of these variables could change significantly and have a major in- 
fluence on the economic benefits to the United States from deep seabed 
mining. On the other hand, the same assumptions have been built into 
both cases, seabed mining commencing in 1985 and seabed mining 
commencing in 1990, so that if am- major changes should occur, they 
would likely have an ecjual efTect on both scenarios; and the compari- 
son, which is the primarv" purpose of this section, should remain largely 
unchanged. 

With these considerations in mind, the economic projections de- 
veloped in this section are an attempt to provide some perspective on 
the possible costs and economic benefits to the United States versus 
time of commencement of commercial deep seabed mining. This 
question has been raised in the context of the immediacy of need for 
the commencement of deep seabed mining. 

( .) 



UNIVERSITY OF FLORIDA 



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